ICE Cotton gains nearly 100 points this week

Selling on fears over China’s reserve sales has slowed – the market prefers bad news to no news - and initiation of fresh spec shorts has been limited, allowing the market to build a technical base and consolidate nearly 4 cents off the mid-November lows.

US export sales have continued at a strong pace and will need to slow down in order to prevent 13/14 carry-out from reaching impossible levels. As a further indicator of this, cert stocks this week saw 140k bales removed from the board and it is uncertain whether they will rebuild by March for delivery on the H4 contract.

With the hedge fund position at a very small net long, there is ample room for new buying on positive news; indeed the main impetus for selling would more likely have to come from index fund withdrawals and negative macroeconomic news.

Ecom USA