Cotton prices continue to push higher reaching levels not seen since late 2008. The board is inverted with the squeeze on H'10 and this is making it very difficult to find demand from mills. Technically, the charts are very friendly with almost 10 straight green bars and no clear resistance in sight. Specs have increased their long position to 11.6% from 5.5% last week. Open interest has remained basically unchanged at 165k.

China has returned from holidays but many mills will remain closed an extra week in some cases. Along with the high levels in NY, this may lead to an extended break in mill buying Cert stocks are growing quickly as we wait for H'10 to expire. There are still 2,100 contracts open after 3,600 have traded hands since the close on Friday. For now, the market looks like it will continue to test highs into scale up trade selling. However, longer term cotton is looking overbought and the USD is strong based on disappointing consumer confidence numbers.