WASDE-480-17                    March 2010

U. S. Cotton Supply and Use 1/

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:         :         :      2009/10  Projections

Item               : 2007/08 : 2008/09 :===============================

:         :   Est.  :    February           March

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:               Million acres

Area                       :

Planted                  :  10.83       9.47          9.15            9.15

Harvested                :  10.49       7.57          7.69            7.69

:

:                   Pounds

Yield per harvested        :

acre                   :    879        813           774             774

:

:             Million 480 pound bales

:

Beginning stocks 2/        :   9.48      10.04          6.34            6.34

Production                 :  19.21      12.82         12.40           12.40

Imports                    :   0.01       0.00          0.01            0.01

Supply, total            :  28.70      22.86         18.74           18.74

Domestic use               :   4.59       3.59          3.40            3.50

Exports                    :  13.65      13.28         12.00           12.00

Use, total               :  18.24      16.86         15.40           15.50

Unaccounted 3/             :   0.41      -0.34          0.04            0.04

Ending stocks              :  10.04       6.34          3.30            3.20

:

Avg. farm price 4/         :   59.3       47.8     59.0-65.0       60.5-65.5

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Note: Reliability calculations at end of report.

1/ Upland and extra-long staple; marketing year beginning August 1.  Totals may

not add due to rounding.  2/ Based on Bureau of Census data.  3/ Reflects the

difference between the previous season’s supply less total use and ending

stocks based on Bureau of Census data.  4/ Cents per pound for upland cotton.

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Looking at the market today we see a downside bias with all macro factors pointing to a flushout of weak length. There is no incentive to own commodities this week with weakness seen on fundamental, technical and macro fronts.

Tomorrow’s WASDE report is looking for an increase in S. American production numbers with Brazilian beans looking over 67 MMT with Argentinian corn looking over 20 MMT. Both will add downside pressure on the market. Only small changes are expected to US consumption numbers with Soy and Corn exports always on the move. Old crop carryout is in question following reports that hte remaining 4% of the corn crop left in the field will be tilled under to help expediate new crop plantings.

Outside of this we need to look at increasing reports of BioFuel mandates and increasing Ethanol mandates as we move through 2010. This is a major factor for Ann Frick, lead analyst for Bache. She is calling for July oilshare to reach 51%…WOW. Currently trading at 45%.

MPI

Money supply is up which is good news for the markets. However the market is trading sideways as unemployment and cost cutting techniques both remain to be issues. The market may have a little more upside but I do not believe job s will start reappearing anytime soon. Also, other countries may start going bankrupt which could create fear. Where the jobs Obama?

Crude Oil is making new highs here on the NYMEX for 2010 and this should not go unnoticed with the WTI spreads rallying along with the flatprice.  The spreads rally, especially in the back with Jun/Dec  to -170 and Dec/Red to -160 has had a positive affect on the upside for the oil markets.  Right now $83.60 does not look far out of the reach here and if these spreads keep rallying flat price will keep climbing.

Wednesday we’ll receive the latest USDA crop report and it is likely to show a further reduction in the crop. The cold weather did cause damage and this report ought to verify some of that damage. There should be more possible, so lean towards the long side….

SBK: Res. 2233-37, 2288, 2322, Sup 2162, 2140-2123, 2090

KCK: Res. 13130, 13285, 13390, Sup. 12970, 12860-25

CCK: Res. 2889, 2903, 2946-55, Sup. 2811, 2799-2795, 2760

CTK: Res. 8309, 8449-75, Sup. 8176, 8095-8075, 8000

The Yen could break out over the next few days and is currently trading at 1.13. The stock market wants to make a bullish move but is still worried about jobs and factory orders. My idea to take lottery winnings and create more slot machines at airports could really help the American people. Where else can we get significant amounts of money without taxing the consumer. Tax the rich! Well, in all honesty that’s stupid because they are the only people buying stuff. It is scary how much revenue is created after the government taxes lottery winnings. I think this should be investigated further. We can pay healthcare bills for the entire U.S if we make a big lottery donation.

There is nothing pretty about agricultural markets right now. We don’t have any upside incentive from fundamentals and now macros are falling to pieces. With US jobless rates climbing and no real threat of inflation there is no incentive to buy. With prices relatively cheap there is little incentive to sell, thus we are stuck in a range. I still feel we are entering a timeframe dominated by spreads and relationships. Watch the beans corn relationship for best action heading into planting.

Here is a good article that i found from Bloomberg stating Greeces credit rating might be lowered and the Euro losing ground against the USD and the Euro to new yearly lows…… This will have a huge impact on the precious metals markets….

“The euro fell toward a one-year low against the yen on speculation Greece’s credit rating will be downgraded as the country struggles to push through fiscal cuts demanded by the European Union.

Europe’s single currency also dropped toward a nine-month low against the dollar after Standard & Poor’s said it may cut Greece’s rating again by the end of March as a weak economy and political opposition threaten the nation’s ability to reduce the EU’s largest budget deficit. The dollar gained against 15 of its 16 major counterparts before a report today forecast to show U.S. durable goods orders increased.

“There are concerns that Greece may not be rescued,” said Satoshi Okagawa, head of the foreign-exchange forward trading group at Sumitomo Mitsui Banking Corp. in Tokyo. “This is causing selling of the euro and buying of the yen, and leading to risk aversion.”

The euro dropped to 121.10 yen as of 11:09 a.m. in Tokyo from 122.03 yen in New York yesterday. It fell to 120.71 yen on Feb. 5, the lowest since Feb. 24, 2009.

The 16-nation euro declined to $1.3494 from $1.3538. It touched $1.3444 on Feb. 19, the lowest since May 18. The European currency has fallen 2.6 percent versus the dollar this month, heading for a third monthly loss, its longest stretch since November 2008. The dollar fell to 89.75 yen from 90.15 yen.

The cost of protecting against default on Greek government bonds increased 13 basis points to 384 yesterday, according to CMA DataVision prices.

Rating Downgrade

“We believe that a further downgrade of Greece of one to two notches is possible within a month,” S&P analysts led by Marko Mrsnik in London said in a statement released late yesterday.

S&P cut Greece’s rating twice in December to BBB+ and signaled at the time it may lower it again. Greece has struggled to persuade investors it can slash its budget deficit from last year’s 12.7 percent of gross domestic product.

“I’m not sure if other nations have enough resources to help Greece,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “If the issue is neglected, that will stoke concerns about the euro. The dollar remains strong against the euro on a relative basis.”

Bookings for durable goods in the U.S. climbed 1.5 percent last month after rising 0.3 percent in December, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department reports the data today. ”

http://www.bloomberg.com/apps/news?pid=20601083&sid=ar1hGOR.9mw4

Consumer confidence numbers were expected to be around 55-56 and came in at 46. Let’s talk real for a minute. The big banks, hedge funds, and traders do push their weigh around in the market and can set markets up or down. However, we the people the consumers run the show. If people are not spending money the market should sell off. These swings could go on for a few years which can even effect the technology sector of the market. This sector in my estimation is overbought and could sell off in the near future. Google and Apple are doing well but what about everyone else? The amount of money many companies spend on research and development may have to be cut back if consumers limit spending habits.