In historical terms, however, as seen in Charts 5, 6 and 7, the rally in cotton prices has hardly made a dent in relative profitability.
The market has attracted a fair bit of speculative activity. Funds carry a hefty net long position (Chart 8), but at the same time the pause in the rally during January and February did not heap on unsustainable new long positions. On the contrary, open interest dropped by about 20,000 contracts and the net-long position fell back as well. We therefore expect setbacks in price to be moderate.
Remain long. Raise the 72.5¢ per pound stop recommended on December 19 to 77.5¢ per pound, basis December, close only.