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Cotton prices hold up well
30
Jun '08
Cotton prices clearly took their cue last week from out side markets as the CRB Index of 19 commodities soared to a new all times highs this past week as speculators rushed to buy – crude oil lead the way with record prices. Gold shot straight up as the dollar fell and the stock market collapsed.

After reversing direction seven consecutive days, cotton finally put together a string of three straight winning sessions before running into trouble Friday morning. Nevertheless, it turned out to be the fourth consecutive higher weekly settlement

Cotton prices held well but had trouble sustaining prices above 82 cents. Cotton is clearly stuck between burdensome current supplies and poor demand and dramatically shrinking new crop acreage not only here but in other parts of the world

Most traders seem to be expecting today's report to show anywhere from 8.8 to 9 ¼ million acres planted to cotton. Regardless of what they show, you can expect many skeptical detractors due to the extreme heat coupled with high, high winds of early June. However, one should be prepared for the possibility of a very quick move immediately after the report is released this morning.

Mondays plantings report will reflect actual plantings as of early June AND intended to plant but will not show abandonment. Traders will use this report as the beginning benchmark for acreage until the first survey-based estimate of acres for harvest, expected yields and anticipated production in the August USDA report.

However, also influencing cotton prices, without a doubt, will be the "Quarterly Grain Report" indicating to some extent whether skyrocketing prices have curbed other commodities usage. Additionally, the Crop Progress/Condition report Monday afternoon will be watched closely to measure further deterioration.

Monday is also the end of the month and end of the second quarter. Dec cotton closed last month at 7437 and 7912 the end of the first quarter so window dressing for some funds might also be noted.

Technically, Dec established an "outside range" session on Friday so from that standpoint, a move above or below Fridays 8259-8077 range will probably trigger the election of some stops.

For the early part of the week's anticipated volatility, expect great support at 7785 where both the 21 day moving average and the 50 percent retracement coincide. Also expect heavy resistance anywhere near 8400. From a broader view, two successive closes above 8250 or below 7850 will probably portend a move toward 8600 or 7400 respectively.

Swiss Financial Services

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