Another tick higher for todayΆs close. ItΆs encouraging, particularly in light of weakness in other crops. Cotton export sales are doing well, already at 78% of USDAΆs current forecast for the marketing year that will end July 31st. That compares to a 5-year average of just 72% of projected exports at this stage of the marketing year. In fact, in two of the preceding five years, sales year-to-date were at only 47% of USDAΆs projection in 2009/10 and just 60% in 2008/09 and yet final exports still hit the USDA projection.

The March contract has encountered selling resistance at 77 twice now, but the uptrend line is still clearly in place and we think 78 still a reasonable target for cash marketers to push 2012-crop sales to 80%. And be sure to check with the website if that target is hit, because depending on the driving factors at the time, we may advise adding to 2013-crop sales as well.

One feature that continues to attract buyers is the fact that cotton bulls will be the beneficiary of index fund rebalancing that starts next Tuesday. HereΆs how Herman Kohlmeyer of MJ Nugent & Co. explains it today: “Some good traders are waiting for that buying before starting their selling. It is tempting, but it is a very dicey project to use the rebalancing for an opportunity. The anticipated buying of a bit over 5,000 cotton compares to about twice that amount that was bought last year, and about 11,000 that was sold two years ago.”