So, given the current numbers, I would not expect the the trading range of Dec07 futures to be better than recent years, e.g., between the high 40s to low 60s). Having said that, the tightening foreign stocks is a set-up for volatile prices in the event of reported supply problems or increased demand.
One caveat is whether the planted cotton acreage will be less than the 12.15 million intended acres as of the March 30 USDA report. A bunch of corn reportedly was planted in the South, and it remains to be seen (until the June 29 USDA report) if more Southern acres were planted to soybeans during April, and also how much freeze damaged corn is replanted to cotton.
On top of that uncertainty, the poor planting conditions in the Southeast (from drought) and in Northwest Texas (from cool, wet weather) is raising questions about how much intended (and insured) cotton was either 1) planted at all or 2) will be quickly replaced with another crop.
All of these effects are setting up the market for more uncertainty about the 2007/08 U.S. supply, and hence the importance of the USDA's Planted Acres report on June 29. Still, that report won't answer all the above questions as the USDA survey probably can't capture the late breaking planting decisions caused by the rain delays in West Texas. So the uncertainty about planted acres will likely linger over the summer, maintaining the possibility of volatile prices.
There are other supply-side caveats to the 2007/08 U.S. outlook, which are focused on weather, planting progress, and crop condition.
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