“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Thursday, August 28, 2014

Foreign Custodial Holdings of US Treasuries continuing to Climb

Just a short set of comments this evening. They deal with the usual, "The world is going to move away from the Dollar any day now" chatter.

If it is, it sure isn't showing up in the Foreign Central Bank holdings of Treasuries that are in custody at the New York Federal Reserve.

Here is the chart.

Look folks, I am just as concerned about the US Dollar as the next guy but when I look at the competition, I see one set of assorted problems or another. What that means is that the idea that the world is going to drop the Dollar and move to some sort of as of yet undefined currency in which to conduct the bulk of its trade simply does not carry much weight with me at this time.

Could this happen - yes, it could at some point but I have no idea what it might take to make the world move en masse away from the greenback and to some other currency or basket of currencies. We have all read the stories and heard the talk for years now. The problem with the talk is that there is not yet a viable substitute. If one does arise, hopefully we will be able to see it.

For now however, the US Dollar is still moving higher against several of the majors and US Treasuries seem to be finding willing buyers, even as interest rates move lower over geopolitical uncertainty and safe haven buying.

The world - at least as foreign central banks are concerned - seem more than happy to continue buying US Treasuries. Given the size of the US national debt, that is somewhat consoling for now.

One quick look at the inflation expectations chart or TIPS spread - it continues to move lower. Those buying gold are not buying it out of fears of inflation - they are buying it over geopolitical concerns.

Tuesday, August 26, 2014

They Fall Faster than they Rise

One of the interesting things about markets is the speed at which they can fall in price compared to the length of time it takes them to rise. That is the reason that you will sometimes hear certain traders speaking of having a preference for being on the short side of a market. Such is not always the case ( I remember vividly Minneapolis wheat hitting $25/bushel one year and October Cattle being locked limit up for days on a Canadian Mad Cow case some years ago) but it does seem to happen more often than the reverse.

Case in point is this September Bean contract which has now managed to lose in two days, what it took 7 to put on. The collapse in those spreads has been intensely dramatic.

Take a look at the chart below and you will see what I am referring to.

The Euro managed a bit of a pop higher early in the session but surrendered that as the session wore on. It appears to be lacking much in the way of chart support until one nears the 1.3100 level. The chart shows the RSI down in oversold territory so a bounce is possible at any time but the pattern is decidedly bearish. Oversold conditions can last for quite some time before a market corrects them. It should also be noted that oversold ( or overbought ) readings can often be corrected by a market meandering sideways for a period.

Not much to say about today's markets overall than to note that the S&P 500 hit and pushed through the 2000 level today. The strength of this bull market has been nothing short of astonishing. Who knows how long it will last but those who have not fought the tape and gone with the move have made some enormous profits.

One of the reasons that the market continues to perform so well is that inflation expectations are simply no where to be found at the moment.

Take a look at the TIPS spread chart ( updated through 8/25) and see for yourself. Can you can how the spread continues to fall. It is now at the lowest level it has been in for the last 4 months. That is telling us that the market expectation for rising inflationary pressures is declining.

Geopolitical events are continuing to keep the gold price from succumbing to the general deflationary bias in the markets right now although it should be noted that Western investment demand, as measured by the GLD, continues to be less than impressive. Total gold holdings are down 2.6 tons on the year. Asian demand seems to be firm at the moment, especially out of India, but as has been the case for so long now, Asian demand in and of itself cannot produce a bull market in the metal. That requires Western-based investment demand and even more importantly, the momentum based crowd. Quite frankly, the latter are not interested in gold at the moment as they are too busy making money in the equity markets.

Another chart of the US Dollar - it is hanging around the resistance zone noted on the chart. If it clears that, I do not see much in the way of overhead chart resistance above there until near 83.50 and up.

The strength in the Dollar, combined with the fundamentals from the various commodity markets that go into making this GSCI, has led to a sharp fall in the overall sector. It remains lower on the year after recently hitting a 16 month low.

Monday, August 25, 2014

Old Crop Beans Finally give up the Ghost

While it is a bit premature to say that the fun in the old crop beans has come to a close, the price action today speaks volumes. We've all known that those who were chasing beans higher were beginning to realize that there was no sound reason to pay the kinds of prices that they have been dishing out for them, when the combines have already begun rolling in the Delta. Tight-fisted holders of those old crop beans have to be aware that they were about to get crushed in a basis collapse. The deal was however, that it became a matter of not if, but WHEN, the party was going to come to an abrupt end. We might have seen it today.

Basis levels are still incredibly strong but all that means is that the cash market is doing the work of pulling that old crop out of storage to make room for the incoming harvest. There will probably still not be any big deliveries against the September contract come first notice day ( this Friday ) but that does not mean we will not see further volatility in that month. I for one would be surprised to see any deliveries given the steep discount to the spot markets in the September. However, as the delivery period moves forward, if the basis begins to do what many of us expect it to do, one might very well see some deliveries begin to emerge. We will have to wait and see. Either way,  I am beginning to think it really does not matter all that much to the futures market at this juncture. I am however, staying open-minded about this situation since it is unprecedented.

This is what makes predicting FUTURE prices and timing such an enormous waste of time. Everyone was just convinced that we would see no weakness in the September bean contract whatsoever going into the delivery period. And yet, we had a negative downside reversal day in that month posted in today's session. Whether we get any additional downside in that month remains to be seen as of yet; however, I do not think many expected to see what happened in there today happen so soon.

AS a side note - this is why people making constant dogmatic assertions about the gold or silver price should be completely ignored. They no more know where the price is going and when than does the proverbial man in the moon. The problem with too many of them is that they believe their own BS.

Back to the beans however. Here is the price chart: Look at the huge range ( nearly 70 cents from high to low). They don't call beans the widow makers for nothing.

The grains were weaker across the board today as good rains, and warm temps ( at least not excessively blazing hot ) are making for ideal finishing conditions for the crops. Also, the rains hit the areas in the Belt that were coming in a bit on the dry side. that essentially alleviates any concerns in those regions from further deterioration due to dryness issues.

In looking over the Soybeans Conditions ratings, the Good/Excellent category fell to 70% from last week's 71%. However, Illinois, Indiana and Iowa, all showed either improvements in that category or remained unchanged from the previous week's numbers. Minnesota actually improved from 64% to 66% Good/Excellent! Wisconsin added a point to that category. North Dakota jumped 3 full points. It looks to me like Kansas was the state responsible for pulling the overall national ratings down more so than any other state. It's Good/Excellent rating fell 5 full points to 48%.

I do not think of Kansas however when I think of beans so I am not sure if the market will pay any attention to the slight 1% deterioration overall. The fact that the biggest growers of beans all either improved or held steady is more important in my view.

Also, the % of the crop setting pods is at 90% compared to last year's 82% and the 5 year average of 89%.

turning to corn, this is remarkable - 73% of the crop is rated Good/Excellent compared to 72% last week. It actually improved! The thing about corn which is interesting is that as it moves closer to harvest time, the overall appearance of the plant tends to become more ragged as the energy is going into the ear, and not the leaves. That is what makes this week's rating even more impressive.
The Illinois crop actually got better, which is hard to believe given its already incredible condition. It is now rated 82% Good/Excellent up from 80% last week. Iowa held steady at 75% Good/Excellent as did Indiana at 73%. Minnesota showed a big improvement jumping to 71% from 68%.

As far as progress goes, 83% of the crop is in the dough stage compared to 67% last year and 78% over a 5 year average. The crop seems to be a bit behind when it comes to denting however as it is 35% compared to 21% last year ( ahead) but 43% (behind somewhat) for the 5 year average.

The Euro continues to fall apart as it broke below round number support near 1.3200 and looks to be on course for a test of 1.3125 - 1.3100.

The Dollar continues to look impressive on the charts. It made its first foray into resistance territory noted on the chart and then pulled back slightly but the trend still looks bullish.  This is all the more revealing when one considers that the yield on the Ten Year Treasury has been declining lately.

I put these two charts up together because I am of the view that gold is going to struggle to maintain any sort of strong, sustained move higher in this environment. The Dollar is moving higher in anticipation of higher interest rates even as the yield on the Ten Year is descending. I have no idea when the Fed might be able to actually raise rates but markets run more on expectations or perceptions than they do on CURRENT realities at times. If the big specs are becoming more and more convinced that rate hikes are on their way next year, they are going to need some other very good reason to tie up investment capital in gold, which throws of no yield and depends entirely upon capital appreciation to record any gains for its buyers.

Please do not misunderstand what I am saying here ( I can already feel the wrath of the gold cultists ). The metal will draw buying support from geopolitical or economic uncertainty but such buying in and of itself is insufficient to launch a strong, SUSTAINED bull market. That requires big speculators chasing prices higher and willing to commit to it in a big way. Right now, I see no evidence of such sentiment when it comes to gold, especially given the strength in the US Dollar and the general weakness in the overall commodity sector. Perhaps it will take place in the more distant future but as far as the shorter term horizon is concerned, gold is not in favor at the moment among those seeking capital appreciation.

Turning to the gold shares, the juniors' index is still stuck going sideways. It is having difficulty attracting any concerted buying near 45 and beyond. It looks like those who want to own the things are okay with accumulating them at this point but they are not the least bit interested in paying up for them. Again, there are very few momentum based buyers in this sector at the moment.

 I will leave you with one last chart, and it is a doozy! Fighting that powerful uptrend has been a thankless ( and often profitless ) task! Only the very quick on the draw have been able to pull much out of the short side of this market.

Friday, August 22, 2014

Agressive Hedge Fund Selling Plagues Silver

One look at the intermediate term chart for Silver is all it takes to realize that the metal has distinctly fallen out of favor with the hedge fund community.

Oddly enough, the hedgies made a big push into silver in early June of this year so much so that they managed to build the largest net long position that they have had in nearly 4 years.

The large Swap Dealers were more than happy to sell to them however with the result that once the "inflation is coming" sentiment ran out of steam, the hedge funds had no one left to sell to when they had to bail out.

Look at the collapse in those net long positions of the hedge funds and compare that to the above price chart in the second week of July of this year. Out they went and as they did, down went the price of silver. As said many times here - large speculators drive markets.

Don't worry however because we are assured from various precious  metal dealer commercials that a certain billionaire fund manager has predicted that silver prices "go north of $50 this year because China and India are trying to corner the silver market".

All I can say to that is it is one tall order! With 4 four months left in the year, inflation expectations had better change in one big hurry! Again, it is so tragic that people will run out and spend their hard-earned money and precious investment capital on investments touted by those talking their book instead of doing some hard-nosed, objective analysis of the markets.

When one looks at the various commodity sector indices ( I am currently using the Goldman Sachs Commodity Index) they are hard-pressed to find the least bit of inflation in tangibles. With the Dollar beginning to surge higher, and with the entire commodity complex under selling pressure, making the case for sharply higher silver prices is a fool's errand at the moment.

Can things change in that regards? Sure they can! The one thing about markets is that they are always changing. For the time being however, one must respect the charts and right now the charts are saying  that the notion of $50 silver before 2014 comes to an end is a  quaint fairy tale, without some sort of stupendous event occurring. Such claims may work to sell silver to the naïve and unsuspecting while enriching those whose main source of income is derived from ties to the metal, but they do nothing but discredit such carnival barkers in the eyes of objective observers.

I do not have the words to properly describe the disdain I feel when hearing these ridiculous commercials or when reading articles advocating heavy investment into the grey metal. The same people have been singing from the same song book for nearly 3 1/2 years now and have been utterly and completely wrong. One would think that shame and embarrassment would be enough to silence them but no, it goes on and on and on, hardly skipping a beat.

Here's the prognosis from the chart and let's leave it at that for now:

The metal is making a series of lower highs on the weekly chart while continuing to find buyers between $18.50 and $18.00. So far that support is intact. If one is inclined to own physical silver, it would make sense to look for opportunities to acquire the metal if it revisits those levels again. However, be prepared to sit on those holdings for some time without much in the way of overhead gains UNLESS the metal can burst through the $24 level and stay there at the end of a trading week. That would be the first sign that things might be changing in regards to silver sentiment.

 Keep in mind that markets can often sit for long periods of time in trading ranges, moving back and forth, or up and down and essentially going nowhere as they mark time. Silver could be carving out a range along those lines or the metal could fall through its lower support level and actually begin another leg lower. I honestly do not know what it will do in the future - guess what? Neither does anyone else. They can talk confidently about it but the simple truth is that unless they can foresee conditions across a broad variety of inputs a year out from now ( or a month or two years or whatever), they are just guessing, no matter how dogmatic that they might be about it.

Watch the charts instead. They are your friend and will let you know what the metal wants to do. Ignore the carnival barkers, the hucksters, the flim-flam artists with the extravagant headlines meant to regale you and think for yourself. Trading/investment is hard and demanding work - it requires a tremendous dedication to your craft and endless hours researching, comparing, back-testing, analyzing, etc. to be successful. Ignore the impulse to rush out and throw your money into some investment because someone with some sort of reputation is touting it at the moment. Do your own homework and then trust your own judgment.

So what if you make a mistake! Learn from it and if the chart tells you that the trade was not a good one at the moment, get out of it and try another asset class or another time. The market is not going to disappear. It will be there tomorrow giving you another opportunity to be successful but only if you learn from mistakes and learn to ignore the carnival barkers. The truth is that few ( if any ) of them are going to be there to take care of your family or loved ones for you. If you fail, what harm have you done to them? But you will have harmed yourself or your investment goals if you blindly follow these people. No one cares more about your investment goals and your personal success than YOU! Remember that!

Processors Still Chasing Old Crop Beans

The show must go on! The show I am speaking of is the continued squeeze of the shorts in first, the July, and then the August and now finally the September bean contract. Processors are trying to pull enough beans out of the hands of those who still own them to keep them supplied while they eagerly wait for the new crop to start flooding in.

The storyline of Feast vs. Famine or better, Famine vs. Feast, has perhaps never been more aptly illustrated in the soybean market than by the price action between the two crop years. As the 2013-2014 marketing year winds to a close, the tight carryover has resulted in a lack of deliveries as tight-fisted holders of the beans try to squeeze every last nickel out what they still own while the rest of the market braces itself for a massive harvest. This has sent the spreads widening out once more and made for a September bean contract which is pulling the entire grain floor higher as short-term oriented technical-based traders come in and buy.

ProFarmer was out with their usual news about how "disappointing" corn yields are going to be in Iowa this year, compared to what USDA is projecting but nothing that comes out of Pro-Farmer ever surprises me. That is putting a bid under the corn market as well.

I suspect we will see the game in the September bean contract continue as we head into the delivery process ( I believe FND is next Friday). It will be interesting to see if we have the same lack of deliveries that allowed the August to soar prior to expiration or if the holders of these beans finally decide to get rid of them while they can still fetch some of these stratospheric prices prior to harvest pressure commencing. The combines will be doing their thing in the Delta sooner rather than later at this stage. Expect some pretty wicked volatility in this contract as the days progress.

There is some heat coming into parts of the Midwest today and through the weekend but that has been preceded by fairly decent rains. Temps should fall off somewhat early next week. In my view, this is a very good scenario for the crops. With sufficient moisture in most areas, heat will work to speed development. It is one thing to have very hot temps without moisture; it is altogether another issue to have heat and moisture, especially when corn is through its pollination stage and beans are mainly setting pods or in the process of filling them.

Gold is hanging above support just above $1270. The support zone is noted on the chart. It extends from $1280 - $1270. A downside breach of this zone will send the market down towards $1240. Right now the only thing gold has going for it is geopolitical in nature. Ukraine, Gaza, ISIS, etc. From what I can tell at this point, large traders are selling rallies; however, there is enough interest coming in from those buying it for a safe haven from geopolitical unrest that it is not falling sharply. Range trade is still the name of the game in there. Some are squawking about Russia sending a humanitarian relief column into Ukraine without asking permission and that is firming the metal somewhat today after it was pressured early in the session.

Fed Chair Janet Yellen's remarks in Jackson Hole today were considered not friendly for gold as they were construed along the same line as the FOMC minutes released this week, namely, hawkish. Still, the decision to move on the interest rate front will be data dependent as it has been for some time now.

The Dollar is definitely on the move. The double from the FOMC and from Yellen's remarks this AM, combined with some decent economic data this week, has sent it moving strongly higher on the charts. The breakout from that band of congestion is impressive. There does not look to be much in the way of overhead resistance until one nears the 82.60 level. Resistance in the USDX seems to be coming in near the ".50" levels. ( 82.50, 83.50, 84.50, etc.).


In retrospect, it is now obvious that Draghi ( urged by Euro zone exporters) has gotten exactly what he wanted for, namely, a weaker Euro. Whether the 1.40 will prove to be a MAJOR LONG TERM HIGH in the Euro is yet unclear but it certainly is a Intermediate term high. With the Fed talking interest rate hikes and with some bemoaning "Europe's lost decade", higher interest rates are not coming to the Eurozone any time soon.

With the Euro perched precariously just above another downside support layer near 1.3200, any violation of that will allow the currency to drop another 100 points towards 1.3100. The RSI demonstrates how weak this market has been for some time now.

The way things are looking right now, homeowners in the US Northeast are going to catch a nice break this winter on their heating costs. Heating oil prices have been steadily moving lower throughout this year, but especially over the last few weeks. Price is approaching what appears to be a pretty strong level of support near $2.80 - $2.72 however. That might hold it. However, if we see crude prices continue to weaken, heating oil will likely melt right through this support zone. I want to keep a close eye on this market as we approach the 3rd quarter and begin to move towards the colder weather later this year.

Gold stocks continue their range trade as well. You can see the two large, well-defined ranges drawn on the weekly chart. Until price can break out from one or both of these ranges, they are going nowhere. The good news for the long-suffering gold stock bulls, is at least they have stopped going down! There is some steady accumulation taking place by those with a much longer investment time frame horizon but for those looking for momentum-based movers, this sector is certainly not "it".

Wednesday, August 20, 2014

New Crop Beans Set New Low

Excellent growing weather for the month of August ( ample rains and no excessive hot temps) are leading to ideal finishing conditions for the bean crop. Reports from the field indicate a big crop which is probably going to get bigger as USDA revises its regular updates as we move closer into the harvest season.

It has been the same old story about tight carryover stocks from the 2013-2014 crop that has kept this market supported but even that now appears to be giving way to reality.

Today's move lower in the November contract has set a new low for this extended bear market not only in terms of the low made but also the closing price.

At this stage, bulls have little to bolster their argument for higher prices except to pray for an early September hard freeze.

Is that possible? Sure it is - anything is possible when one talks about weather but farmers with new crop who have not secured anything in the way of downside price protection are literally playing with fire at this point.

Today's FOMC minutes definitely took on a more hawkish tone with even the doves moving more to the center. That is how it should be when a consensus begins to slowly emerge among those with some differing opinions. More and more it is looking as if the Fed is going to be moving on the interest rate front sooner rather than later. Again, this is not to suggest that we are going to see longer term interest rates spike; what it means is that barring any sort of economic downturn, these ultra low rates are a thing of the past at this point. So enjoy them while you can.

Geopolitical events could still induce safe haven flows into bonds and that will work to lessen any severe upside rate movements but it does appear at this point as if the die is cast.

I came away from reading those FOMC minutes with the view that the Fed is anxious to get back to a more normal monetary policy stance.

If this is indeed true, it is hard to make the case for a weaker Dollar given the weakness in the Euro Zone and in Japan when contrasting the overall economic footing of the three respective zones.

In such an environment, commodity prices are going to struggle as an asset class. Individual markets will then have to rely on their own specific set of fundamentals to move higher, but that is how it should be. These macro plays where hedge funds and other large investors buy blindly across the entire gamut of commodity markets tend to greatly distort prices. That eventually leads to an oversupply as those sectors respond to the higher (speculative induced) prices by increasing production. The result is a sort of Boom/Bust cycle that takes place. I think we are seeing some of that right now.

Euro falls below 1.3300

Here is the weekly chart of the Euro...

There is support near 1.3250. If that were to fail, it could easily lose another full point.

We might see some volatility when the FOMC minutes hit the wires later today.

The weekly trend however is down.

And now the Chart of the Dollar:

The weekly trend is higher. It has some light resistance near 82.50 with stronger resistance just shy of the 83 level.

Unless we get some sort of surprise out of the FOMC minutes or Yellen's testimony this coming Friday, it seems that the most likely price action in the Dollar is more of a steady grind higher. I do not see anything on the chart which might be suggestive of a sharp surge higher. That could change however if the market believes that higher rates are coming here in the US sooner rather than later. I for one would be surprised to see such a line of thinking but one never knows.

Suffice it to say for now, a stronger Dollar is not conducive to rising commodity prices in general.

Along that line, the GSCI moved higher earlier in the session on the back of higher crude oil prices but has now surrendered most of those early gains as crude fades somewhat and as grains and livestock work lower.

Tuesday, August 19, 2014

Is the Dollar King Once More?

It sure looks like it is. It all comes down to interest rate differentials in my view. The US, out of the big three, the Euro Zone and Japan, is the only economy where we are even talking about higher interest rates. The other two are not there yet as growth is stagnant at best in those economies. Please do not misunderstand what I am saying here - I am not saying that interest rates here are going to rise anytime soon. I am saying however that if and when rates finally do begin to rise, traders are convinced that they will do so FIRST here in the US.

Today's Construction data reminded currency traders of that fact.

Yesterday I mentioned that stubborn band of overhead chart resistance that has served to keep the Dollar's upward progress in check. Today it finally blew right through that!

The ramifications for the commodity complex in general are all too well known by anyone who has been watching the markets over the last few years. Higher Dollar tends to equal Lower Commodity prices overall.

We are seeing that in the Goldman Sachs Commodity Index which continues to get pummeled lower. It just missed setting a fresh TWO YEAR LOW in today's session especially with crude oil being obliterated. Crude has not been at these levels this year since the third week of January!

I think it bears repeating - were it not for geopolitical tensions in Ukraine, it is highly doubtful gold would be able to withstand this outside pressure. Gold needs an environment in which REAL rates are either flat or negative as there is very little opportunity cost to hold the metal under such circumstances. However, in an environment in which interest rates are likely to rise, and rise at a clip that will keep them above any incipient rate of inflation, gold is going to experience obstacles to a rise in its price level. Investors/traders are not going to lock up precious capital in an asset that throws off no yield and one that many do not see as necessary given the current lack of inflationary pressures.

Gold bulls will need to be cautious therefore and alert to any signs that geopolitical tensions surrounding Ukraine might be lessening. So far we are not seeing any drastic outflows from the GLD, ( not that its current levels of holdings are anything to be the least bit excited about ) but if we do begin to see such an occurrence, it will not augur well for a stronger gold price moving forward.

Based on the current data that we have, gold demand has been dropping off somewhat from last year's torrid pace. If investors begin to more largely embrace the higher interest rate scenario, that is not going to help it.

On the grain side of things - traders knocked the new crop beans lower today as news of the improvement in the crop conditions ratings from USDA yesterday became more widespread. Also aiding the downward progress was reports from the Pro Farmer crop tour of very strong yields in the fields that the tour surveyed.

The tour will be moving to a different location today and will be reporting its findings from that area.

Bean bulls are still playing up that "tight old crop stocks" situation however. My guess is that is going to continue until about the time that the combines begin rolling more heavily in the southern part of the country. That coincides pretty closely with the delivery process for the September contract so that should prove to be rather interesting to say the least.

The livestock markets were hit with another wave of selling after a brief respite  from the carnage that was unleashed in there on the heels of the Russian ban. The change in market sentiment in this sector has been remarkable for its rapidity. We have gone from euphoria to panic in a mind-boggling short period of time. We are going to have to see how the ban impacts the beef and pork markets especially once the buying for Labor Day wraps up this week.

One good thing about this for we meat lovers is that it has brought back to earth the stratospheric prices that we have been both seeing and unfortunately, paying, for our necessary vice.

Silver looks like it is back on course to test the $19.00 level once more. Copper has thus far shrugged off the strong construction data and is testing chart support near last week's low at $3.08. If the red metal were to fail there, odds are that the grey metal will see $19.00.

Sugar prices hit a six month low today while Cotton prices continue to languish below $0.65/pound.