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DTN Morning Cotton Commentary          10/22 07:37

   Cotton Sharply Higher on Production Concerns 

   December cotton is up well over 100 points as concerns over production 
losses from Michael are finally beginning to take root in the minds of traders. 


By Keith Brown
DTN Cotton Contributing Analyst

   December cotton is up well over 100 points as concerns over production 
losses from Michael are finally beginning to take root in the minds of traders. 
Of course, in addition to Michael, there have been other high profile weather 
events, which have banged the crop during 2018. Initially, in the spring it was 
the intense drought in West Texas. That event had prices well over the 90-cent 
mark. Unfortunately, that bullishness was harshly negated by U.S. tariffs on 
China. Then in late summer, Hurricane Florence tormented the Mid-Atlantic 
States with copious amounts of rain. Now, in the middle of harvest, Hurricane 
Michael slashed and burned his way up the Florida, Alabama, and Georgia cotton 
belts, with suggested losses exceeding one million bales. Monday, another 
storm, Category 4 Hurricane Willa, is coming across the Pacific side of Mexico 
and may find its way to the Delta and southeast cotton areas. Of course by 
then, Willa will be a rain maker, but at harvest, who wants that sort of 
weather? 

   Technically, the cotton market is oversold within the confines of a steep 
downtrend. However, October, November and December is the odds on time to see a 
seasonal low posted. So, the speculators may began to come in on the long side. 

   Monday afternoon, USDA will release its most current crop condition/crop 
harvest data. We would expect even more damage from Michael revealed in those 
numbers.

   Monday support for December cotton stands at $0.7733 and $0.7685, while 
resistance ought to emerge at $0.7960 and $0.8060. 

   Keith Brown can be reached at commodityconsults@gmail.com


(BAS)

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