Strong commercial buying in new-crop supported the cotton market again Friday. The July contract was 0.43 cent lower, the December was up 0.29 cent, and the March lost 0.48 cent.

The new-crop December contract posted a strong gain this week, supported by continued commercial buying interest. The December to March spread rallied to an inverse of 1.04 cents at the close, its strongest level in just over a year. The move in this spread shows a growing concern over new-crop supply and demand, influenced in part by the release of USDAΆs latest crop production figures this past Wednesday. Needless to say the trend of the December contract has also turned up.

The contract closed above technical resistance at 89.03, a price that marks the 50% retracement level of the previous downtrend from 107.36 (week of June 6, 2011) through the low of 70.70 (week of June 4, 2012). Notice that these turns are at about the same time of the year, raising the question as to whether or not this week could be an important turn in 2013.

The five-year seasonal index for the December contract shows the new-crop contract tends to post a high the second week of June, before turning lower through late July.