Today was the sharpest one-day gain since mid-June. Monday’s decline in crop condition ratings along with extreme farmer reluctance to price with new crop bids so close to the government loan option for cash flow started the week with a bounce but the buying really “got legs” and fed on itself today with some nasty Gulf weather forecasts now posing a threat.
We suspect it was more short-covering than fresh buying, but it doesn’t matter. That’s nearly always the case after a long bear market; the market simply runs out of new willing sellers and those already short decide it’s time to ring the cash register and take profits rather than risk the proverbial “bird in the hand for two in the bush.”
We advise catch-up sales for those not at current recommended levels. Global fundamentals remain very bearish and this should be seen as a bear market rally, not the beginning of a new bull market for cotton.