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Export sales continue to come in above trade expectations and the USDA may even need to revise demand higher if the shipment pace picks up some steam. Demand is poor but not as poor as traders have anticipated as cheap prices may have sparked the extra demand. Coincidently, December cotton bottomed one day after the bottom in the S&P futures and signs of better than expected economic news recently has added to the short-term uptrend. December cotton closed moderately lower on the session yesterday, however, as long liquidation selling and follow-through technical selling from Tuesday’s reversal-type action helped to pressure. Weakness in soybeans and talk of improving soil condition in the southern US helped to pressure. With traders expecting a shift away from cotton acres in the Delta, Texas weather becomes even more important than normal and traders are anxious to see if Texas gets enough rain in the next week to help bust drought conditions. Export sales news was positive for the market but this failed to provide much support yesterday. Net weekly export sales for cotton came in at 321,300 running bales for the current marketing year and 28,000 for the next marketing year for a total of 349,300 bales as compared with expectations near 175,000. As of March 19th, cumulative cotton sales stand at 96.4% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 83.0%. Sales of 21,000 running bales are needed each week to reach the USDA forecast. US textile news was not as friendly. Textile mills used cotton at a seasonally adjusted rate of 3.09 million bales in February which is down from 3.67 million in January and down from 4.527 million bales last year at this time. Traders are positioning ahead of the plantings report on Tuesday morning with most traders looking for 8.3-9.0 million acres vs. 9.4 million planted last year.
TODAY’S GUIDANCE: December cotton support comes in at the 48.87-48.37 zone with 52.12 as next upside target on a resumption of the minor uptrend.
