Cotton futures began the day being called to open unchanged this morning with some follow through fund selling meeting commercial buying early.
The emphasis on the get go was certainly bearish, especially with the spreads which continued to widen, getting out beyond 400 to 440 at one stage, having gotten as narrow as 290 mid last week. Funds continued to be sellers of Dec as the day went on though, and the pressure translated to new fresh contract lows in both Dec and March.
The trade remained scale down buyers, with mill fixations taking up the bulk of the buying. Prices continued to diverge throughout the session, especially going into the close, with one of the largest merchants selling around 750 of the March 50 calls which ended March in slightly positive territory.
Open interest in December is down to 16,000 lots prior to this morning, and between offsets, todays liquidation and the expected deliveries, we can assume a fairly orderly final liquidation. Estimated volume today was decent at 22,891lots.
Tomorrow morning will release the weekly spec / hedge report, and this week should see another large increase in the spec short holdings.
With heavy spec selling throughout last week as well as a dip in open interest owing to the December liquidation, we could see a spec short figure somewhat closer to 20 percent net short.
A reminder that December first notice day takes place this Wednesday, with notices being released by the exchange at 5.30pm EST on Tuesday.
marketing@alchempro.com
