After being confined to a narrow two cents range over the last three weeks, December finally broke through the 54.05 cents support level last Friday, triggering an onslaught of spec selling.
As the latest spec/hedge report showed, short speculators are currently the driving force in this market, having added another 5'700 contracts to their short position last week.
While the NY futures market has lost ground over the last five weeks, the world market price, as measured by the A-index, has held steady. As a result, the spread between NY Dec and the A-index has widened from 319 points to 689 points since August 1st.
Because US cotton has not been able to compete in the post Step-2 period due to its elevated price, it is commonly believed that a downward adjustment in NY futures will get US cotton back in the game.
marketing@alchempro.com
