The USDA supply & demand report released last Friday posted a friendly number on the U.S. production number, which was increased from 16.70 to 18.30 million bales on projection of a successful harvest this coming fall. Export projection was increased by 800k bales, and the ending stocks are pegged at 3.50 million bales, up 700k from a month ago. Physical demand is being discovered as price dropped since mid June.

The spec hedge report as of Friday the 9th shows that specs marginally reduced their long positions. Their net position is now 1.9% long, as compared to 3% net long a week ago. The technical outlook on cotton market is still negative and has traded briefly under last week’s low today. Any rally today was capped under yesterday’s high. The market is subject to a larger sell off, but has run into congestion, which is likely to continue for the near term trading.