New-Crop Approaching 86 Cents

At the close Tuesday on the New York Cotton Exchange, December was at 85.03, up 51 points – a new life-of-contract high close.

More significantly, it was the fifth consecutive day that new-contract highs were set. It is now 85.60.

In mid-January, December tested the 80-cent level twice, but was unable to hold only two closes about that. The rule of thumb is that it takes three consecutive closes above a point of resistance to signal an even higher move. After it did not, prices dropped back to around 75 cents.

But then another bull move began. Last Tuesday, December closed above a minor uptrend line and the market has not looked back. Last Thursday, December gapped higher to near 81 cents, came back to fill the gap on Friday (something the market always does) then took off again.

We have been hearing that the basis on new-crop cotton is 350 points, which meant that on Monday growers could book for at least 80 cents. If that is in fact the basis, then growers can book today at a little above 81.50.

That may not be enough for cotton to buy back acres from soybeans, because soybeans have been rising even faster. At the close Monday on the Chicago Board of Trade, November was at 13.96 per bushel.