The market managed to hold minor support to push higher into the close yesterday as cotton was able to shake-off significant bearish forces to trade higher. Ideas that cotton prices are relatively cheap and that cotton will be one of the first commodities to recover once the consumer demand begins to recover has helped support the buying. This seems to be a good theory but it also seems to be way too early to expect consumer demand to recover. Production is expected to fall in the US and China for the coming year and this has supported the new crop cotton. The International Cotton Advisory Committee believes that world production will be lower by 1% for the 2009/2010 season to 23.4 million tonnes and that demand will be near unchanged at 24 million. China is expected to import 1.5 million tonnes for the 2008/09 season, down 41% from last year and shipments from India and Uzbekistan are expected to fall by 40%. March cotton managed to push higher on the session yesterday despite negative outside market forces. Ideas that the market was slightly oversold after closing lower for 4 sessions in a row and light speculative buying helped support. Outside market forces turned “less” bearish in the afternoon and a lack of new selling interest helped to support. The Commitments-of-Traders reports, released Friday, showed the cotton market in a slight overbought condition with speculators net long 20,710 contracts, up 6,301 contracts for the week ending January 27th. Weakness in the grain markets even failed to pressure.
TODAY’S GUIDANCE: The market is still operating under the negative technical influence of the January 27th reversal.
