December cotton futures may break below 50-cent level
02 Oct '06
3 min read
"Turn on a Dime." That is the comment I've heard most of my life with respect to changing direction. My prior suggestions and opinions that New York futures would begin to gradually move higher appear somewhat folly, don't they?
Week after week, with export sales supporting any move down to 53 cents, we gained confidence that demand would support the market at 53 cents. Yet, the market has now collapsed down to 51 cents-and exports have not shown any interest in improving.
The combination of the Northern Hemisphere harvest and the need by the U.S. to sell a large volume of exports, coupled with the near flood of certificated stocks rising higher and higher, have for now, all but washed away any hope that New York can move back to the mid 50's, much less the high 50's.
With the October contract seeming enjoying its visits below 50 cents, it appears that December futures will also break below the 50 cent level---on the way down to 48 cents.
Yet, Mother Nature could still add as much as a nickel to the market with a harvest problem. She is stirring up a mess in China this week. Yet, we remember last week and weekend; the north delta floods were not even mentioned in market news. While it is dangerous to suggest the harvest season is over and the crop is in the warehouse, the market is clearly proclaiming such an announcement and traders are voting their money that the supply situation is set for the remainder of the 2006-07 cotton marketing season.
marketing@alchempro.com
