Is the meltdown over? I think it’s safe to say cotton prices have tried to settle in and find a comfortable place to park.

The more important questions are can it last and what’s the outlook.

The meltdown. Over the past 6 weeks, prices (Dec12 futures) have declined roughly 23 cents (26 percent). On the way down, prices have tried to stabilize at 3 levels — 75 cents but that failed, 70 cents but that failed, and most recently at around 65 cents.

The factors. The reasons for the decline include, but are not limited to improved U.S. drought conditions and drought outlook, increased 2011 crop year ending stocks and projected further huge increase in stocks for 2012-13, weak/uncertain demand, and global economic uncertainties — most notably U.S., Europe, and China.

Improvement. Prices moved back up last week. The question is whether or not this improvement is real and sustainable. After declining to just over 65 cents on Tuesday of last week, prices (Dec12) were up 3 cents on Wednesday and another (almost) 4 cents Thursday to close at back over 72 cents. Friday, however, prices broke back down below the 70-cent level.

The improvement in price last week was due to a cut in interest rate by China’s central bank (an attempt to boost economic growth), good U.S. export reports, technical indicators suggesting prices had fallen too much, reports of dry growing conditions in China, and reports suggesting the decline in India acreage could be more than expected.

What’s ahead? USDA’s next monthly supply/demand estimates will be released on June 12. Will U.S. export projections be increased? Will U.S. projections for 2012 crop production be increased due to improved drought conditions? Will there be changes in 2011 and/or 2012 foreign supply and demand?