Following yesterday’s positive close, NYF Friday session opened 80 higher. Z7 contract hit a new three-year high at 6490 supported by technical spec buying right after open outcry opened.
Market then met some pressure from bearish options strategies and slipped back to trade around 6410 to 6440 in the second half the session. Trade selling failed to hold the market down, and Z7 closed at a new high of 6463.
What drives market from now on should be the crop size and exports. We might be experiencing a volatile market for the rest of the summer. Volume is estimated at 7,805 contracts traded on the floor and 9,183 contracts traded electronically.
This morning’s US export report was mixed but credited as bullish and supported the rise of today’s market prices. New sales were unimpressive at 143,300 running bales upland and pima combined with the majority of 73,100 bales to China. Shipments were excellent with 481,400 running bales combined, which set a new marketing year high.
China was unsurprisingly the largest destination with 210,400 bales leaving for the week. China has now committed to buy 4.179 million bales, and has taken delivery of 3.053 million bales for this marketing year.
Texas is continuing to receive rain. According to our Lubbock office, in the Panhandle/West Texas area, cotton is still lagging behind due to lack of heat units. However, last week's hot and dry weather really helped the cotton catch up some.
Farmers to the north are beginning to fear a very low mic cotton crop, which will be the case if heat units don't catch up and/or an early freeze in the fall comes. In central west Texas, the San Angelo area received major rains last week. Anywhere from 5-10" fell across Ballinger, Sweetwater, and Abilene.
This area is mostly dryland cotton fields. Same as in the Lubbock area, the cotton is just going to be late here. Around Houston, the entire coast down to the valley has received enormous amounts of rain. And 40% chance of rain is expected throughout the weekend.
Another strong close today when all the technicals are indicating strong buy signals. Despite the sideways trading during mid day, prices held up firm for the last hour of today right into close. More buying from the spec side is expected based on the strong technical performance, as bulls are trying to find more market support to chase prices higher.
Moving averages are strong in their upward trend, with the 9 day average at 6294 and the 50 day average at 5712.
