Well the number 13 certainly WAS an unlucky number for cotton prices because thatΆs how many straight lower closes weΆd seen in cotton futures until todayΆs triple-digit rebound.

There was no particularly bullish news to warrant the jump. I strongly suspect it was just a case of short covering by traders with big profits burning a hole in their pockets. With a new crop report and WASDE coming out Friday, and cotton futures already reflecting widespread expectation for a jump in USDAΆs yield per acre and production figures, short traders wanted to cash in early before the inevitable “rush to the exits” one would expect for tomorrow after 13 straight days lower. The buying to claim profits then became a “self fulfilling prophecy” by triggering others to take profits on short positions as well and few willing to sell after so many days lower.

And as pointed out yesterday, the market had become deeply “oversold” from a technical perspective as well. Thus we suggested there might soon be at least a some sort of short-covering rebound and we didnΆt have to wait long to be proven correct about that!