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The market seems to have the short-term supply/demand fundamentals to move substantially lower but inflationary expectations are high and traders remain concerned that the market will not produce enough cotton for the 2009/2010 season and that stocks will tighten dramatically. Speakers at the annual Beltwide cotton conference this week are talking about lower planted acreage for the coming year in the US and a trade house yesterday predicted that China plantings could also fall by as much as 17% which could significantly tighten supply within China and open the door for increasing imports if textile demand were to recover. This seems to be a big “if” as global economic conditions seem to be still deteriorating. Estimates on US plantings this year seem to be closer to 8.5 to 9.0 million acres. The compares with 9.41 million last year, 10.83 million the previous year and 15.27 million acres in 2006. March cotton followed the pattern set by other commodity markets yesterday such as the grains by trading lower. However, cotton differed in that its losses were not as sharp as in a number of other commodity markets, and cotton did not move into new low ground late in the day. Funds were sellers in cotton, as was the case in a number of other commodity markets. Traders said that crude oil was one of the keys as that market remained under pressure. Renewed concerns about the slowing US and world economy stemmed from weak jobs data and a sharply lower stock market among other factors. As usual, this generated concern over renewed demand destruction for consumer goods containing cotton fiber. Monsanto announced today that it would market 5 new seeds that have shown sharply higher yield potential in field trials.

TODAY’S GUIDANCE: The short-term demand fundamentals appear to be worsening but the market is fearing lower production ahead.

This content originated from – The Hightower Report.