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Equity markets continue to slide
Aug '08
Commodities across the board rallied today and were due for a bounce after big pull backs recently in all sectors. The technical picture is looking better and oil and grains showed some good support today as cotton looks like it is setting up for a new sideways trading range between 69-72 cents.

We expect to see some upside scale up selling as we get closer to the USDA report on Tuesday. Volume was better at 16,000 futures and 8,000 options as we are seeing some oversold short covering help lift commodities as the equity markets continue to slide.

Sales and shipments finished out the 07/08 crop year last week and we have the final results. These numbers were better than last year, but still 200k under the USDA estimate. The August crop report will make that adjustment and we will get the first state by state breakdown of the U.S. crop.

We are getting beneficial rains throughout the Memphis/East and even in Lubbock today and tomorrow. All signs are pointing at better than expected production and lower than estimated consumption, but doubt we will see any significant changes on this coming report.

Technicals are starting to look better but we are still trading inside the range set on Monday which tops out at 72.00 and will be the next target to set up a sustained rally. Along with a hot dry August left to grow the Northern hem crop, there is a good chance the market will continue to find support under 69 cents.

If that is the case and we can hold that area on a few more tests, we should try and climb back and test the upper end of the range at 72 cents scale up. However, if the commodity complex continues to slide lower, Z'08 will have trouble sustaining rallies and should move lower long term into expiration.

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