NY futures moved higher this week, with December advancing 179 points to close at 64.58 cents.
The market continued to move sideways with a slight upward bias as renewed weather concerns have tipped the scales temporarily in favor of the bulls. However, trading was again lackluster this week, as the daily volume stayed below 16'000 contracts all week long, with today's volume estimated at just 4'000 contracts. On the other hand, open interest increased by about 5'000 contracts this week, which may be seen as a constructive sign by the bulls.
We are still in a weather market and recent news about detrimental rains in South Texas and a rather erratic weather pattern in China this summer have led to a firming of the 'weather premium'.
In China, many of the main provinces such as Henan, Hebei, Shandong, Jiangsu and Anhui have been hit by unusually strong storms since early July, with hail and flooding possibly affecting the standing crop. A drier weather pattern in August is needed to avoid yield losses from boll shedding, wilting and insect pressure that typically accompany these excessive rains.
Speculators, who have been the driving force behind the market's run-up since May have recently been conspicuously absent as the latest NYBOT spec/hedge report showed. Last week spec longs reduced their position by 5'794 contracts to 11.2 mio bales, while spec shorts bought back 3'776 contracts to cut their position to 4.6 mio bales. These changes resulted in a slightly smaller spec net long position of 65'450 contracts, which corresponds to 31% of open interest.
marketing@alchempro.com
