Cotton drifted lower as we are now 5% off the highs set on March 1st. We were in a technical flag pattern that looked like a correction was near. Breaking through downside support today on good volume has opened up the range to possibly test the support at 78.50. Tomorrows S&D report will have a lot to do with that but the bottom line is ending stocks are tight and even though cert stocks are building, we are still friendly short term.

See the chart on page 2 which shows a 20 year stocks to use chart comparison. We are currently sitting at very low ending stocks in the U.S. at 21% and the last time we were that low, the market was at similar levels in 03/04. China is still lagging after taking extended breaks after Chinese New Year and unless there is a big change in the S&D tomorrow, we should see a further correction in cotton going forward.