Cotton futures continued their bull run Wednesday, with the nearby May contract reaching its highest level since last May. Traders reportedly view the current supply/demand situation as being tight and growing tighter. Wire service sources particularly cited ongoing mill buying for the rise, which certainly suggests a relative short of the white fiber at present.

The fact that new crop supplies will not be available in the U.S. until late summer or fall is probably encouraging bulls as well. Of course, the situation could change dramatically if/when China was to announce that it was ending its policy of supporting its domestic farmers by building a massive stockpile. A statement that it will seek to export cotton could also prove quite bearish, but that seems highly unlikely at this juncture.

The May futures advance posted Wednesday after carried it to a fresh 10-month high at 89.15 cents/pound, thereby topping the 88.78-cent peak reached last Friday. The 88.61-cent close was also the best since last spring. How far will this move carry prices?

One could rather easily assume that the psychologically important 90-cent level will emerge as significant technical resistance, but some technicians are probably looking for a larger advance over the short run. That is, the January surge posted by the May contract carried it from around 76 to 84 cents/pound, so traders may be looking for the ongoing follow-through move to match it in scale. That suggests a target around 92 cents/pound. It is rather difficult to argue against such strength in these conditions.