The next thirteen trading sessions will see a number of important key events. December options expire November 10. The November supply demand report will also come next week and most expect that USDA will again lower its estimate of U.S. exports, thus increasing U.S. carryover. Then, November 22 is the first notice day for the December contract.
Additionally, the large funds will begin on November 7 rolling their December positions to March, considerably affecting (reducing) open interest in the December contract.
Soybeans and corn posted strong gains this week. While they did not reach contract highs, the oilseeds and grain complex seems to have its market highs in front of it. It is very doubtful such could said of cotton prices.
Therefore, we again see that cotton planting should be down in 2007, setting up a strong price rally for the 2007 crop, but offering no help for 2006-07 marketing year prices until the May contract-at the earliest.
Nevertheless, cotton prices should see a strong seasonal rally during the late December-January period. However, that rally could come from the 45-cent level and fail to climb above 50 cents.
The prominent path for the remainder of the year is slightly lower.
marketing@alchempro.com
