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800-634-3194(March 15, 2000) COTTON: Much of the recent action has been in new-crop (December ) cotton, as traders, including cash-connected traders, buy into the December as drought fears have begun to spread. The fact that the U.S. has seen its driest winter in 105 years has begun to worry traders, as they suspect that will lead to a dry summer. Certainly, weather in Texas, a major producer, has been worrisome. This is encouraging a bit of buying despite projections for a crop plantings forecast of 15.4-15.7 million acres, versus last year's number of 14.6. This is not bullish, but also not a surprise. We may see good buying of a negative report. Talk that consumption may be higher than the number last forecast by the USDA is bringing new buying into the cotton. The USDA last called for world consumption to come in at 88.96 million bales for 1999/2000. At the end of the month we will see a Planting Intentions report, and I suspect that will be market moving news. Unless we see dramatic changes in the weather, cotton may be in the initial stages of a long term bull as increased demand eats into burdensome supplies. Weather fears, if realized, will only fan the bullish flames.
M. Steven Morgan
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