Cotton found more support from a friendly USDA report this morning to build on yesterday's bounce. See page 2 for the highlights of the S&D changes but the biggest moves were increased imports from China offset by a 1.5 million bale increase in Chinese beginning stocks. Exports in The U.S went up and India went down so at the end of the day stocks were basically unchanged. Volume was almost a record today with 57k contracts trading hands as the spread was probably the biggest factor as H/K narrowed in tightly as a stopper for H'10 was obvious.

Spec hedge long position went from 8.5% long to .3% or basically flat as you can see on page 3. The USD also struggled with news that Europe was planning a bailout for Greece. This allowed the equity markets to bounce higher as well and make up for Monday's sub10k close. For now, the squeeze on March should allow the market to continue pushing higher. However, demand will certainly slow down at these levels and Chinese New Year starts this weekend so we should eventually settle back down as open interest keeps falling.