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Cotton reflects neutral to bearish expectations
Feb '08
Market continues to trade in the recent sideways channel as we await for more news and reports to come out on Friday. Overnight activity was quiet and sales were within expectations at 280K and 200K in shipments with the current commitment season to date on page 2 in attached PDF.

Turkey, China and Mexico were the biggest buyers, but there seems to be only a hand to mouth buying approach nearby and we will probably find sales fall further over the next several weeks with the Far East on holiday. Volume was average today with the majority of activity in the liquidation of H'08 to the back months as the large hedge funds were scheduled to start rolling the bulk of their positions today.

Tomorrow will be the big news on the grains and cotton where we expect a bullish wheat report which explains the strength over the last few days while cotton, corn and soybeans are reflecting neutral to bearish expectations. The NCC acreage estimate

will be announced after the close and we expect the market to close the week in this range based on option expiration and keeping the market away from the majority of calls and puts with strikes at 69 and 70. Unless we see some big surprises in the S&D reports we expect to have a close in the recent sideways range between 67/69 cents. However, depending on the acreage number, we should be in store for a break out of this range next week.

The relative strength index remains near unchanged and prices are holding thelow at the 50-day moving average. We continue to play the range between 67/70 until more information comes out tomorrow. The 50 and 9 day moving averages continue to get closer as we move sideways and possibly try to test the downside looking for sell stops under 68 cents.

Grains will continue to have the biggest impact as we get closer to new crop planting and the fight for acreage and we will have to keep an eye on wheat after three limit up days.

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