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Cotton prices are holding up well
May '08
Cotton opened higher overnight based on the pending USDA S&D reports as well as higher grain prices. These reports gave us the first look at the estimates for the 08/09 crops. As predicted, the numbers were friendly for cotton going forward, but the world ending stocks for the current crop were raised almost 2 million bales.

The big difference was in China as beginning stocks were raised significantly as well as the production. The balance was made up between small increases in the U.S. crop and India, but all of this was offset by decreased production and higher consumption estimates for next season (See Page 2 in attached PDF).

Oil set another new high as the stock market and dollar continued to struggle and commodities benefited as the CRB index closed near 430. Technically cotton is not very attractive and the RSI is in the mid 40's but we have been putting in a good strong bottom under 70 cents and depending on how grains behave next week, we might try and test the highs starting at 72.43.

NYF cotton prices are holding up well considering the bearish fundamentals as well as the beneficial rains this week in West Texas. Technically, we broke the strong support line at 70 cents in N'08 last week, but we have closed above that level four days in a row. The cotton market feels like we are trying to put in a short term low near 69 cents but we have had six continuous inside trading days based on the range set May 1st.

We first need to break that high set at 72.43 and we can pursue further upside targets heading toward significant resistance near 75 cents. Grain and energy prices will continue to be major factors next week.

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