Cotton Futures started a little lower this morning with some early local selling and a slight lack of commercial interest on the opening.
But as soon as the market re-opened it was pretty clear how the session was going to play out—It soon became all about the spreads.
The December contract traded within a 45 point range, with around 80 percent of the volume taking place in switches.
To this end the Dec /March started out a little narrow, moving from 410 in to 385 before the indexes started asserting control on the bear spreads, eventually widening this spread back out beyond 415 premium to March.
Options expiration on Friday is expected to eliminate around 15,000 contracts of December open interest; however there are still 92,114 contracts open as of this morning so there will be plenty of roll liquidity for the rest of this week.
For now the attention will firmly be on roll, as well as the USDA supply and demand estimates on Thursday, leading into the December options expiration Friday. Quite a busy week for an otherwise less than busy commodity.
Prices duly settled between 3 lower and 12 higher in the active months, amidst 40,932 heavily spread laden volume.
This morning's spec hedge report was as expected of little surprise. The speculators covered some of their short, but very little changing from 7.8 percent to now 7.2 percent net short as of Friday's close. The specs now hold 97,120 shorts compared to83,752 longs.
marketing@alchempro.com
