The technical outlook on cotton futures is still negative. The most actively traded December contract has dropped over six cents since mid June. The market has run into congestion in the near term, but hit a new low today since the end of February this year. Yesterday’s rebound attempt was limited and capped under Monday’s range high.

Crop situation is looking good, especially in the Texas area, with friendly acreage numbers and yield forecast. However, outlook on the retail demand for textile products is not looking that positive. Retail sales dropped 0.5% in June according to the Commerce Department, a second straight month in decline, and concern is raised regarding the economic growth and consumer’s spending power in the second half of the year. Cotton futures slid on weak economic news with December contract reaching a twenty week low at 73.21, more than 140 points lower than yesterday’s close. The market is likely to continue the tight range in the near future, but is vulnerable to a larger sell off.