Another strong day for grains as cotton followed and the stock market closed unchanged. Business was quiet over the weekend
as the market continues to trade on light volume in a narrow range.
At the moment, we still have a positive technical picture, but the fundamentals are looking worse as the harvest gets closer and rumors are that China and India are bigger.
Volume was average with 14,000 futures and 10,000 options as the market is looking for more info in order to justify breaking out of the current trading range between 60/62 based Z'07.
Spec hedge report tomorrow should be higher again this week with a number near 25% as the funds continue to support the
market under 60 cents. As wheat continues to set record highs, we have to believe the trend continues higher short term.
We will need to see the USDA S&D report on Wednesday to get a better idea on all the commodities and where we stand for the
next 4 weeks. Sales and shipments should be lower this week and many merchants are switching offers to Z'07 for Nov/Dec
shipment. This would equate to over a five cent fixed price increase from where most mills covered cotton 2-3 weeks ago.
Technically, RSI is at 50% and we continue to trade sideways with the market closing today in the middle of the range. The upside has actually built a triple top on the chart below the 50 day moving average. Obviously new crop grains remain strong, but the economy and stock market are signaling a possible recession which will make it very hard for cotton to rally.
There was a small bounce today following grains and will have to see if the momentum can break through the top side resistance. There are still several weeks remaining for the Northern Hem crop which will be very critical, but we may be returning to a sell rally mentality if the market cannot break through 62.00 c/lb.
as the market continues to trade on light volume in a narrow range.
At the moment, we still have a positive technical picture, but the fundamentals are looking worse as the harvest gets closer and rumors are that China and India are bigger.
Volume was average with 14,000 futures and 10,000 options as the market is looking for more info in order to justify breaking out of the current trading range between 60/62 based Z'07.
Spec hedge report tomorrow should be higher again this week with a number near 25% as the funds continue to support the
market under 60 cents. As wheat continues to set record highs, we have to believe the trend continues higher short term.
We will need to see the USDA S&D report on Wednesday to get a better idea on all the commodities and where we stand for the
next 4 weeks. Sales and shipments should be lower this week and many merchants are switching offers to Z'07 for Nov/Dec
shipment. This would equate to over a five cent fixed price increase from where most mills covered cotton 2-3 weeks ago.
Technically, RSI is at 50% and we continue to trade sideways with the market closing today in the middle of the range. The upside has actually built a triple top on the chart below the 50 day moving average. Obviously new crop grains remain strong, but the economy and stock market are signaling a possible recession which will make it very hard for cotton to rally.
There was a small bounce today following grains and will have to see if the momentum can break through the top side resistance. There are still several weeks remaining for the Northern Hem crop which will be very critical, but we may be returning to a sell rally mentality if the market cannot break through 62.00 c/lb.
