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DTN Morning Cotton Commentary          02/26 07:27

   Cotton Lower on Follow-Through Selling 

   The cotton market's huge reversal Thursday was dramatic. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market's huge reversal Thursday was dramatic. The sell-off 
commenced pretty much after USDA's weekly exports were deemed "ordinary'' and 
not "dynamic". However, the market was ripe for a break. In Wednesday night's 
trade the market achieved a 2 and 1/2 year high, plus was already overbought by 
any technical measurement. So with month's end at hand, traders saw it as a 
prime opportunity to unload, and did so with acceleration.  

   Per USDA, cumulative sales for 2020/21 have reached 13.409 million bales, 
down slightly from 13.433 a year ago but the second highest since 2010/11. The 
five-year average is 11.027 million. Sales have reached 94% of the USDA's 
forecast for the marketing year versus a five-year average of 83%. China's 
commitments are more than twice what they were last year (at 1.980 million) and 
are the highest since 2011/12. Their five-year average for this time of year is 
1.496 million. 

   Friday afternoon CFTC will release its commitment-of-traders report. Traders 
are curious to see how this most recent decline affected the market 
participant's structure. However, given its data is delayed a week, that data 
will not be known until next Friday. By then the market will be in a new 
calendar month and hopefully recovering. 

   Spot March cotton had 32 notices issued Friday. They originated from Term 
Commodities and were all stopped by Wells Fargo. Delivery continues until March 
9.   

   For Friday, support for May cotton is 86.50 cents and 85.50 cents, with 
resistance at 90.20 cents and 91.50 cents. The estimated morning volume is 
19,435 contracts.

   Keith Brown can be reached at commodityconsults@gmail.comor by calling (229) 
890-7780.




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