At the same time we believe that the 66/67 cents level in December is now representing solid support, as mills will be ready to use any dips to make additional fill-in purchases and to fix their 5.6 mio bales of on-call commitments.
However, as we have pointed out last week, there is still a sizeable amount of US old crop left for sale and until this inventory is reduced by another 2 or 3 million bales, we see it difficult for the market to rally.
Looking forward to next year, there is evidence that farmers will continue to cut acreage here in the US and also in some other parts of the world, which will sooner or later translate into higher prices.
It is all a matter of timing, but we firmly believe that higher input costs and further inflation no longer justify a cotton price near 70 cents, despite all the advances in seed breeding that have led to higher yields.
Our best guess is that prices will stay in a trading range for another two or three month, followed by a sustained rally as we head into the next planting season.
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