Cotton finished the month of June still caught in a broad sideways trading range on the monthly chart. The June 28th Acreage report showed an increase in acres planted from March intentions; normally bearish. But prior to release the average trade estimate was for a bigger increase, so futures actually worked higher this week. HereΆs the monthly chart now that JuneΆs high, low and close has been added

As noted on the chart above, since the beginning of the year futures have oscillated in two big swings between support just under 80 and overhead resistance above 92.

A big reason for this broad sideways action is the huge uncertainty posed globally by China and what it will do with its enormous stockpiles said to be in “reserve”, but now totally more than 14 monthsΆ usage for that country! If, as Chinese textile officials reported two weeks ago, Beijing decides to unleash stocks into the market and support farmer income with direct subsidies, that would be very bearish and almost surely drive futures below that support line just under 80 and down towards 70 or lower.

But if, on the other hand, that proves only “wishful thinking” by Chinese textile officials and China continues to hold more than half the global reserve stocks “off the market”, then any weather problems at all in a key cotton-growing part of the world could easily spurt futures back up for another “test” of that overhead resistance above 92.

Until we have reason to suspect either scenario developing above, the sideways range will likely contain both rallies and breaks.