Will cotton picking be profitable?
Cotton has had a hard time the last years, competing with the synthetic materials. Now it seems that cotton is back, or at least having a go at it. Since 1983, cotton has been trying, on several occasions, to break through a barrier that had formed on the monthly chart from about 80 to 95 cents. In 1995 it managed to break through and reach around 117 cents, only to drop down to about 28 cents in 2001. Since the bottom in October 2001, it managed to break through several resistance levels on its upward move reaching just under 85 cents in October 2003, only to close 
well below the 80 cents barrier at around 77 cents.
Since then the cotton has been trading in a tunnel on the monthly chart, not being able to break the 58 cents barrier until June when a new base was set for the price above the 58 cents. The prices on the monthly chart have been trying to pass the 65 cents barrier and the question now is, will the bulls manage to take the prices higher? The Slow Stochastic indicator (SSTO) has shown increasing pressure on the price, but the weekly and daily charts show a possibility for a move higher.
On the weekly chart, the price is reaching a resistance point, with the SSTO in a neutral to upward indicating direction. The weekly 
chart could give the monthly chart a support for a bit higher price, especially if it breaks through the resistance around the 66 cents area.
The daily chart shows a bit more interesting, and firmer signs. The December 2007 contract showed a gap forming, both when a bottom was reached in the middle of August and again when the prices gaped again on the upward move. This gap was closed late November, just before the last trading day of the December contract. The March contract has since moved upward, confirming the area as a support for a bullish move. With the SSTO showing a move out of the oversold area, the bullish sentiment should have a good possibility to brake through the 66 cents, that form a resistance for the upward move. If that resistance is broken, a move to the 70 to 71 cent area is a possibility.
Depending on the strength of the market, the cotton might break through that resistance with the prices possibly heading higher. The goal from there would be the 80 to 95 cents resistance tunnel. 
A break through that tunnel would be quite unlikely in the first try, but then nothing is impossible. Cotton is increasing in popularity, especially considering the fact that the main competition, synthetic fabric is mostly made out of oil and thus becoming increasingly more expensive. This and the fact that cotton fields have been used for Soy beans for some years now, decreasing the availability of the product, could have the effect that demand would increase.
There are indications that the price of cotton will be moving higher in the near future. How high is difficult to estimate, but a price of around 80 cents per contract, could be seen as a possible high before a stronger market heads through that level. Should the high of 2003 be broken, a possibility for a similar drive as in 1995, could be in the charts. What ever happens, cotton is worth looking at.
