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DTN Morning Cotton Commentary          10/20 08:30

   Cotton Higher, Specs Buy

   The cotton market posted new highs for its move overnight as speculators 
continue to ramp up their buying.

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market posted new highs for its move overnight as speculators 
continue to ramp up their buying. Last Friday's CFTC data indicated a net long 
59,000 contracts, but conventional wisdom would suggest they are even deeper in 
their long-side holdings given the immediate upward price action. Experience 
historically suggests such trend-following traders will overstay their 
positions and eventually will sell out. However, as of now, it seems the 
January Phase One High of 73.00 cents is the next likely target. 

   Also undergirding the market is the growing belief USDA understated the 2020 
crop in its October supply-demand report. The government reported a mere 15,000 
bale reduction, pegging the 2020 crop at 17.05 million bales. However, 
producers out in the country are convinced much more damage was done by 
Hurricanes Sally and Delta. Some analysts openly say the crop is closer to 16.0 
million bales. USDA will update its monthly supply-demand data in early 
November. 

   USDA crop ratings have the crop at 40% good/excellent, unchanged from the 
last two weeks. Additionally, the 2020 crop is 36% harvested versus last week's 
26% gathered, and the ten-year average of 35%. 

   The market is also watching to see if a new stimulus deal is cut before the 
presidential election. So far there is a lot of cat-and-mouse politics being 
played between Speaker Pelosi and the Trump Administration. 

   For Tuesday, close-in support for December cotton stands at 70.00 cents and 
69.00 cents with overhead resistance at 71.00 cents and 73.00 cents. The 
current estimated volume is 16,060 contracts.

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




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