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Weather dumps trouble on cotton crop

01 Jun '09
4 min read

Certificated stocks, cotton eligible for delivery against the July contract in three weeks, have grown each day this last months and for all practical purposes are now over 323,000 bales. To my knowledge there have been no rumors concerning the delivery.

With the June 5-10 planting deadlines looming for much of the dryland areas south and west of Lubbock, the planters are rolling. Despite insufficient moisture on much of the high plains, the clock then begins to tick on the 15 day waiting period. Of critical importance to the market will be the USDA June 30 plantings report.

As things worked out, I am not sure there is any particular significance that July was hemmed in between the 40 day and 21 day moving averages Friday, However, should the market have been able to close above or below those points, it could very well have had technical significance.

The bearish crossover of the short term moving averages under the intermediate moving averages last Tuesday is normally a reliable indicator. Fridays rally may have been feeding on these new bears. However, since that indicator is still bearish, it leads me to believe that resistance between 5800 and 5900 may be too much to be overcome without fundamental help. On the downside, despite 5275 still a viable downside target, support around 5450 may be sufficient to catch any sell off without a full blown turn around in the dollar.

Swiss Financial Services

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