Cotton prices (Dec12 futures) have moved above the target 75-cent mark, closing Friday at 75.21.

Although moving sideways during July, prices have slowly trended up since the low back in early June. After several rallies, successive lows have been higher and higher. This typically signals a slow shift toward a more bullish outlook.

The 75 to 78-cent area continues to be the target for producers needing to make additional marketing decisions. Dec12 closed at 77.3 cents on Aug. 22.

There continues to be talk of prices going to 80 cents and that may happen at some point under the right combination of events. But, at present the market has shown no willingness to break through the ceiling at around 78 cents.

Supply/demand news update

India planting and the crop are expected to be down from last year. Reports suggest, however, that planting and production may be more than USDA’s current estimate.

With a reduced crop, exports from India are expected to be sharply lower than last year. Reduced exports from India should support prices.

With lower world prices, plantings this fall may also be down in Southern Hemisphere cotton areas.

Prices will continue to be whipped around by China polices. Recent reports are that China will allow an additional 1.8 million bales of imports to be used by mills for export products.

China’s cotton stocks are expected to grow from 29 million bales to 34 million bales this season. Chinese stocks will be determined by additional imports for the purpose of building stocks and release/use of stocks for domestic mills. This will impact prices — as price would be one factor that China may consider in managing its stocks and reserves.