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DTN Morning Cotton Commentary          08/16 07:43

   Cotton Sharply Up on Follow-Through

   After two limit-up days, the cotton market remains sharply higher Tuesday 

Keith Brown
DTN Contributing Cotton Analyst

   After two limit-up days, the cotton market remains sharply higher Tuesday 
morning. Short-covering, speculative buying and mill hedging have combined to 
catapult prices to within earshot of the May high. Of course, in that process, 
the market has become overbought and some analysts think it is unsustainable, 
based on lagging demand.

   Monday afternoon, USDA issued its weekly crop rating data. The numbers were 
all over the place. Firstly, the nation's cotton crop slightly improved from 
31% good/excellent to 34% good excellent. This compared to last year's pace of 
67% good/excellent. The Texas crop is now rated very poor-to-poor on 50% of her 
crop, while number two Georgia stands at 66% good/excellent. However, the 
Southeast will soon be entering the worst time period for hurricanes.

   This Thursday, USDA will publish its weekly export sales report. Last week's 
data was a big improvement, but of course sales have been running at either 
marketing-year-lows, or levels slightly above those amounts. The report is out 
at 8:30 a.m. EDT.

   The U.S. dollar continues to churn out new highs, especially in light of the 
weakening Chinese economy. Tuesday's housing starts number will likely 
influence the Greenback's upward path.

   The latest weather outlooks, both the 6 to 10-day and 8 to 14-day forecasts, 
essentially show above-normal rainfall and below-normal temperatures. In many 
of the dryland areas of Texas such a forecast is a moot point.

   For Tuesday, support for December cotton is at 115.00 cents and 112.00 
cents, with resistance at 120.00 cents and 121.00 cents. Tuesday morning's 
estimated volume is 19,051 contracts. 

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

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