Cotton made a nice double top in 1990 and 1991 at 94c. That double T was 10 months apart. The 2013 market has done the same trick in half the time. Why 94c, and why a double top? We don’t know, and did not see this breakout running to 94c, and cannot claim to have foreseen the collapse from there. But before we throw away all of our forecasting skills, allow us to make this statement, which will be backed up by whatever wagers our friends wish. The high for this market year is in place. There. Said it. Its over. On 20 Aug at approximately straight up 10a, spot traded 9390 and Dec traded 9372 to end the bull. Now all that’s left is to determine how the rest of the 49 weeks still left in this year will trade. That’s tough duty.
A 94c futures market is somewhat extreme, but the spread inverts were much more so. Inverts, or the “anti-contango” spreads have stopped cold merchant activity to buy farmer cotton and sell into second hands. If the inverts keep their place, which is likely into the Dec delivery, then almost nothing gets done regards merchants making sales. The Board says it wants the cotton, and that’s just where nearly all of the tenderable early harvested supplies will go. To the Board. This may not be much cotton, but in a year when the US exports will be abysmally small, it will be enough to get some carry back into the market after the Dec dies.
The best thing we can offer for trading is to lay low and try to keep the bullets and hornets away. What changes markets most of the time is an extreme price, and after the market has gone to one extreme, it often goes to another. We’re not saying there is an imminent drop into the mid 70s coming right away, but the fact that severe rationing via outrights and spreads has been done so early, this could open the door to what some would perceive as extreme lows later on. Yes, we think the high is in place, and will take some wagers from a few honest men that this high will last for the year. What comes next is a tough nut to crack. The carryout is razor thin, and the Chinese hold most of the trump cards. Our bias remains on the bear side, but after this moonshot to 94c in 2 weeks from a low of 84c, we are some mighty humble bears. Technicals

These are the most relevant supportive levels in CTZ3 from what I see: [From Craig Coatney]
87.72-75 = Moderate support. 87.72 is the 50% retracement from the June low, and 87.75 is the August 12 low.
87.11 = Minor support. The July 11 high.
86.13 to 86.55 = Major supportive zone. Seven previous daily highs from mid-to-late July.
85.80-89 = Major support. Last two daily highs of the triangular formation (late July/early August) as well as trendline resistance of 85.89 when the trendline was penetrated.
85.25 = Minor support. Apex of the above mentioned triangle.