Smaller harvests may bolster prices that reached a 31-month low of 64.61 cents on June 4, said Jon Devine, an economist for Cotton Inc., an industry group in Cary, North Carolina. Hedge funds on Aug. 28 were the most bullish since February, holding a net-long position of 13,047 futures and options contracts, Commodity Futures Trading Commission data show. The December-delivery contract traded at 76.89 cents a pound today.

U.S. farmers, the largest exporters, can earn more planting crops including corn or soybeans, which reached record prices this year after a drought that T-Storm Weather LLC estimates was the most-severe since 1936, based on temperature and rainfall in June and July. A USDA report on May 1 showed cotton growers lost $154.17 an acre in 2011 and corn earned $194.52. While the agency won't estimate this year's returns until Oct. 1, cotton prices are 21 percent lower and corn is up 41 percent.

Eoin Treacy's view In an environment where commodity prices have been under upward pressure, cotton has been a notable exception. This has allowed clothing manufacturers a certain largesse in pricing which has probably contributed to the outperformance of the sector. (Also see Comment of the Day on May 11th and 23rd).

Inditex, Next Plc and Gap Inc have accelerated higher and are becoming increasingly susceptible to mean reversion. Ross Stores and TJX continue to trend higher in very tight bands. Breaks in their respective progressions higher reaction lows would suggest mean reversion is underway. American Eagle Outfitters is becoming increasingly overbought but would need to break its progression of higher reaction lows to check momentum.

Under Armour has been consolidating above its previous high for a month and a sustained move below $50 would be required to question medium-term upside potential. Ann and Chico FAS completed lengthy ranges with emphatic breakouts in the last few weeks and while they have become somewhat overbought in the short term, sustained moves back into their respective ranges would be required to question medium-term upside potential. Children's Place Retail Stores has rallied to test the upper side of its almost two-year range. While some consolidation of recent gains looks likely, a sustained move below $50 would be required to check potential for a successful upward break. Urban Outfitters also rallied impressively over the last few weeks and is looking increasingly susceptible to some consolidation as it approaches the 2010 and 2011 highs near $40.

Carters, PVH, Macys, Ascena, Sport Direct and Limited Brands have all found support in the region of their respective 200-day MAs over the last month and sustained moves below their trend means would be required to question medium-term scope for continued upside.