USA : Chinese interest makes cotton mills nervous

Market certainly found a bounce off the new record weakness in the USD which fueled gains in the entire commodity complex including record highs for crude oil at 97 usd/barrel! Gold also hit 28 year highs @ 828 usd/oz. as well as strong gains in grains as well as cotton.
We managed to stay within the 30 day sideways trading range, but only settled 40 pts from the top of the range and we did break the wedge resistance to the upside. Volume was above average in futures with 39,800 in volume and options of 11,500 contracts.
News still remains quiet, but there is rumor that China is interested in cotton that can be delivered by December 20th so they do not lose their annual import quotas. China has quite a bit of new crop Indian cotton purchased for December shipment, but the mills are starting to get nervous.
This has created a bit of short term interest for consignment stocks and other old crop cotton that can be delivered on time. We are expecting some cut backs in production on Friday's USDA report, along with a possibly friendly export sales report on Thursday. This news combined with option expiration and the spec rolling scheduled to pick up on Wednesday may lead to some fireworks on Friday.
Technically, we broke the upside resistance on the sideways pattern which has been building over the last 5 weeks. We still have not broken the nearby top at 65.65, but the market has been getting quite a bit of support today from the weak dollar and strong commodity prices.
The uncertainty in the stock market does not feel like this move can hold long term as the RSI moves back toward 60%. Most commodities look vulnerable for a pull back, but the dollar and equity markets will determine the short term fate for cotton. Energy, metals and grains were very strong and the stock market finds good support at 13,500.