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DTN Closing Cotton            07/19 13:47

   Cotton Higher on Short-Covering

   After being pummeled for days, the market had become so speculatively 
oversold that it was time for a snap up.

By Keith Brown
DTN Cotton Correspondent

   After being pummeled for days, the market had become so speculatively 
oversold that it was time for a snap up. Thus, the December cotton finished 
with triple-digit gains Friday. Coming into this third week of July, the market 
was down 4.00 cents on the month. Friday it will finish some 3.00 cents lower 
on the month but higher week-over-week.  

   It is no secret that the speculators are heavily short the futures; in fact, 
they are record short. Next week they will attempt to defend their position by 
selling into established overhead resistance. On Monday, USDA will offer up 
another weekly look at the general condition of the crop. Last week, the market 
saw a 56% good-to-excellent rating for the crop, but the weather situation of 
late has been dry and brutally hot in some areas. Thus, Monday's rating may 
have the crop easing backwards.  

   The 2018-19 crop is quickly fading. Officially, it ends on July 31, and with 
that the transition from old crop to new crop. So, there may be some 
interesting dynamics in the export-sales markets as 2018-19 passes the 
marketing baton to the 2019-20 season. To that end, China has been 
detrimentally absent in the cash business. Therefore, it speaks bearish volumes 
when the price of cotton is so near the 60-cent level and export-sales remain 
muted.  

   For Friday, December Cotton closed at 63.07 cents, up 1.36 cents, March 
finished at 63.98 cents, up 1.10 cent and December 2020 ended at 65.73 cents, 
up 0.51 cent. Estimated volume was 22,300 contracts. 

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


(BE)

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