After successfully holding the 57.00 cents support level earlier in the week, the market rebounded as spec selling became less pronounced and one of the major merchants shifted from bearish to bullish options strategies a couple of days ago.
Since the limit down move on August 16, the market has been confined to a relatively tight range between 56.70 and 59.38 cents over the last ten sessions. The fact that volume was relatively light, especially on down days, is encouraging from a bullish perspective, because it signals an exhaustion of downside momentum.
The latest NYBOT spec/hedge report showed that spec long liquidation slowed down considerably last week, as they reduced their position by only 1'086 more contracts. However, spec shorts, who until recently have been relatively inactive, increased their outright short position by 5'897 contracts.
Overall the spec net long position dropped by almost 7'000 contracts to 38'714 contracts as of last Friday, which amounts to 19.5% of open interest. Trade shorts were on the receiving end of this spec selling, as they bought back 7'840 contracts, while trade longs reduced their holdings by just 857 contracts.
US export sales continued at a brisk pace for the third week in a row, as a total of 488'300 running bales of Upland and Pima cotton were sold to 24 different markets. Total commitments for the current marketing year, which started on August 1st, now amount to 4.9 mio statistical bales, whereof 1.2 mio bales have so far been exported.
marketing@alchempro.com
