To me this reads as a tiny piece of confirmation or acknowledgement we have a grain boom afoot. The depressed cotton price means the SP is carrying a cotton hangover. Provided their hedge book for 2007 is 'lazy' they could be a good punt. Its dangerous to hedge in the face of a raging bull. And I mean that for cotton. High cereal grain prices are likely to have pulled significant acres away from cotton across the globe. I am punting on cotton prices moving in line with the broader commodity bull by the end of the year. Mind you I am not always right.
Number one risk to these cotton guys is water or allocations so a clear picture on that front would need to be guaged. But given they may seek to grow cereals water use is lower if they go for an irrigated winter cereal crop.
