DTN Closing Cotton Commentary          09/02 14:36

   Follow-Through Buying Powers Cotton to New Highs

   U.S. export commitments for 2010-11 already have reached more than 47 
percent of the USDA forecast. Much of mill bookings placed on-call. Rainfall 
again dotted West Texas Plains.

By Duane Howell
DTN Cotton Correspondent

   Cotton futures continued to register new highs without a correction 
Thursday, surging to strong closing gains on buying attributed mostly to 
chart-based inspiration.

   December advanced 208 points to close at 89.49 cents, in the upper reaches 
of its 231-point range from up 19 points at 87.60 to up 250 points at 89.91. 
Spot October closed up 74 points to 90.87 cents and March added 241 points to 
87.95 cents. Red December gained 115 points to 80.57 cents.

   Volume rose to an estimated 20,300 lots from 13,448 lots the previous 
session when spreads accounted for 3,794 lots and EFS for 960 lots. Options 
volume topped the futures turnover, totaling about 18,200 calls and 11,000 puts.

   Follow-through speculator and fund buying powered the market higher in the 
face of a slowdown in robust U.S. export demand, which has been a key factor in 
driving prices higher.

   Weekly sales for delivery this season still amounted to 252,200 running 
bales, down from 486,200 bales the prior week but still viewed as a healthy 
number with futures for December delivery having ranged during the reporting 
week from 82.46 to 86.50 cents.

   However, mills have been putting much of their bookings on-call, indicating 
they are not willing to buy at prevailing prices. This has tightened available 
supplies, an analyst pointed out, while the growing unfixed mill position has 
created tremendous support beneath the market.

   Commitments for 2010-11 climbed to 6.921 million running bales as of Aug. 
26, already more than 47 percent USDA's export forecast with the marketing year 
not quite a month old.

   New-crop sales of 17,600 running bales, against 1,800 bales sold the 
previous week, hiked 2011-12 commitments to 88,600 running bales, up from 
82,700 bales in forward bookings a year ago.

   Exports for the season reached 883,200 running bales on shipments of 
221,200, down from 242,400 bales shipped the prior week. Cumulative exports 
were up 33.3 percent from 662,400 running bales a year ago.

   On the crop scene, scattered showers and thunderstorms again dotted the West 
Texas Plains, depositing beneficial overnight rainfall in official gauges of 
0.75-inch at Brownfield, 0.36 at Childress, 1.80 inches at Denver City, 0.85 at 
Lamesa and 0.48 at Memphis in Hall County. A Texas Tech Mesonet reading showed 
1.42 inches at Seagraves.

   Some producers plan to shut down irrigation wells this weekend. Cotton with 
a heavy fruit load has been using a lot of soil moisture, and some producers 
south of Lubbock plan to continue watering a while longer unless a cold front 
due in the area later today brings sufficient rain. Chances for rain are 60 
percent tonight in the Lubbock area.

   Futures open interest expanded 1,554 lots Wednesday to 221,147, with 
October's up three lots to 983 and December's up 1,441 lots to 147,397. 
Certificated stocks were unchanged at 18,060 lots.

   International values as measured by the Cotlook A Index rose 100 points 
Thursday morning to 95 cents, narrowing the premium to Wednesday's December 
futures settlement by 31 points to 7.59 cents.


(KM)

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