It not often to see the New York market trade limit down (or up for that matter), but Thursday found cotton futures caught up in the bearish feeding frenzy associated with the U.S. mortgage industry.
Electronic trading of cotton futures hit a snag when the software platform for electronic trading allowed trades that exceeded the limit down move. Thus, electronic trading was required to cease. Nevertheless, the open outcry futures trading pit for cotton continued to trade, but still could not move off the 300 point limit down level.
Over the past four months, cotton trading has been influenced more by other economic markets rather than cotton fundamentals. Just when one thinks cotton will begin trading its own fundamentals, another economic malady steps in and dictates cotton prices.
Fund trading and speculators took the market on a double digit ride to the upside in June and July and now August gives us the limit down day as a spin off from the commercial paper market.
The significance of Thursday's economic meltdown was that it is the first time in memory that all sectors and all markets demonstrated extreme weakness. In all prior economic meltdowns suffered in the U.S. economy, at least one major sector showed strength, but Thursday's events saw U.S., as well as all other stock markets sell off, as well as the financial markets and commodities. No financial industry was able to withstand the deluge that left all markets as dizzy asif they had been struck by mad cow disease.
marketing@alchempro.com
