Cotton Futures began the week being offered around 20 lower this morning, with little over the weekend news to drive the market early.
There had been some export business over the weekend though, including China and especially for foreign growths. This led to a buy tone on the re-opening with lows for the day being set early around the 48.80 mark.
With the GSCI roll beginning tomorrow there had been a lot of jostling and front running by the locals expecting this spread to widen out considerably. Having started the day out around 415, this soon narrowed a little which had the local specs in a bit of a bind.
The subsequent bull spreading on the Dec / March had prices soon back to unchanged, before some local pressing had spec buy stops being triggered above the 49.50 level, with the Dec soon bouncing to the 50.00 resistance.
Commercial selling was noted at this level, whilst the specs were again active in the deffered options deliveries, continuing their buying spree of July 60 calls and Dec 70 calls.
Again with new crop grain prices so firm, the market is having to price in a large reduction of new crop acres both in the US and abroad.
Price closed firm on the day with active gains of 47—71 points. Estimated volume was quite decent at 22,000 lots.
Tomorrow morning's spec hedge report should contain few surprises, the speculators if anything over the last week have covered some of their short position.
After last week's net spec short of 8.3 percent we can expect a net spec short of around 5-6 percent tomorrow.
marketing@alchempro.com
