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DTN Closing Cotton            09/21 13:50

   Cotton Keeps Higher Bounce  

   Taking its cue from a recovering Dow Jones, the cotton market finished back 
above the 90-cent mark Tuesday. 

Keith Brown
DTN Contributing Cotton Analyst

   Taking its cue from a recovering Dow Jones, the cotton market finished back 
above the 90-cent mark Tuesday. Subscribers are aware of Monday's massive 
financial implosion, which was caused by the potential default of a Chinese 
real estate company. Its outstanding debt is rumored to be greater than 300 
billion U.S. dollars. At any rate, Tuesday the stock market witnessed a decent 
recovery which inspired cotton, among other commodities, to follow suit.

   Traders are awaiting, with keen interest, the outcome of the Federal 
Reserve's two-day policy meeting. The gathering is set to conclude Wednesday 
with some sort of statement regarding tapering, which is the pulling back on 
artificial stimulus from the U.S. economy. Interestingly, according to the 
Stock Trader's Almanac, the month of September is historically a bearish time 
for stocks and has evolved into several steep October declines. Of course, at 
the heart of the Fed's decision is the plight of the U.S. dollar.

   Despite cotton's 300-point spill of Monday, open interest remains very high. 
To that end, speculators hold a very large net long position. If the Chinese 
economy were to endure a setback, one would think prices could fall even 
deeper, causing the heavily laden net long funds to liquidate. In addition, 
with the 2021 harvest unfolding, there ought to be a noticeable uptick in 
commercial selling.

   For Tuesday, December settled 90.03 cents, up 1.01 cents, March ended at 
89.34 cents, plus 0.95 cents, and Red December (2022) ended at 80.71 cents, 
0.44 cents higher. Tuesday's estimated volume was 24,989 contracts.

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

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