Lai Yin Hart: Cotton eventually fell below last Friday’s strong closing price

New York Cotton: New York Cotton inventories last week removed a huge number of cards, while U.S. export sales are also impressive, Monday, the market hit a new high. But in other trading days, cotton prices have begun to defend itself, eventually fell below last Friday’s strong closing price. March / May spread widening to 94 points, because the market is expected to register the next few weeks will increase the inventory.

Having Outlook: Last week, the promulgation of the positive stimulus program may have been proved to be a brief interlude. The latest economic data out entirely bad, several major financial institutions is expected to further lower the global growth. These messages may not be sufficient surprising, but it can one be convinced that the demand for the restoration of cotton may need to undergo a long and difficult period.

Broader technical still indicates the market from the bottom in November 2008, started the operation, recently climbed to the peak, which is larger decline in prices appeared in a contrarian move. March 2009 contract closed below the 45 cents, as may be determined by this view.

Less concerned about the recent market index fund. However, it must be borne in mind that they are still carrying large net long position of the cotton market, about 60,000 hands, or cotton and options disk space 30%. Since the March 2008 peak, the overall disk space reduced 64 percent, but the index fund positions held by only 46 percent reduction.