Cotton remains under pressure with spec liquidation as the market bounced off the lows on good volume. Our weekly spec hedge report shows specs now 3% long compared to 12% last week. There was a significant sell off in spec positions recently but Z'10 has now found good support at 74 cents on Friday and today. Cotton has certainly been on a correction hitting 15-week lows and could be close to finding a bottom.

European markets are still weighing on the equity complex which keeps the USD strong and commodities on the defensive as well. Goldman Sachs also is not helping the financial sector and all of these factors lead us to a potential double dip that has many traders anxious to sell. N'10 expiration is close and the roll is in full swing now which is keeping the spreads under pressure. Expect more down side testing with support in Z'10 until we get N'10 open interest under 20k.