From a fundamental point of view the market is getting decent support as well, as physical prices are beginning to catch up to the futures market, which has been running ahead in recent weeks. Indian prices took a big jump this week and are closing the gap to African and US offers. Mills are reporting decent yarn margins and there are still a lot of holes to fill as far as coverage in the second and third quarter is concerned.

All in all it adds up to a market that has very good underlying support and should hold above 80 cents in the foreseeable future. The market’s upside potential depends on how the trade’s short position gets resolved over the next couple of months.

Plexus Cotton Limited