Cotton closes higher, market rife with cut in US yield
13 Jul '07
3 min read
Market was trading lower electronically and continued to follow the trading range of the last few days as we eventually bottomed out near 66 cents and then rallied back to reach close to the contract high at 67.50. Volume was similar to yesterday with futures above 20,000 contracts and options close to 40,000.
The market was looking for more bullish news from the reports today, but found them neutral to bearish. Looking at the USDA report, we did get the expected cut in U.S. production which reduced the crop from 18.8 mb's to 17.5.
This was offset slightly by the also expected reduction in U.S. exports to 17 mb's from 17.5 This information was already in the market as that represented the main difference in world ending stocks by reducing them from 51.23 to 50.78 mb's.
There were adjustments in China including a 1.5 mb increase in production which was offset by a reduction in the Loss category of the same amount. Along with a weaker export sales and shipment report (130k sales, 400K shpt.) compared to last week, the market continued to trade in a tight 100 pt range as we wait for a big move down the road.
Just to mention the crop progress and the improving conditions in the Delta and Southeast. Over the past 2-3 weeks isolated showers have frequented this territory and most everyone has captured beneficial moisture along the way. Many producers in the North Delta are expressing the crop looks as good as they have ever seen it.
Attributing this to the consistent warm weather from the first day the cotton was placed in the ground. In the East the picture has changed from early spring, as rains are falling weekly. The water table is far from being replenished, but enough moisture is falling to move the crop along.
marketing@alchempro.com
