Cotton market up by around six cents over last 3-weeks
15 Sep '07
3 min read
NY futures continued to advance this week, with December adding 243 points to close at 62.85 cents and December'08 gaining 270 points to close at 71.85 cents.
Over the last three weeks the cotton market has risen by around six cents, which means that it has made up about half of the losses it sustained during the previous downtrend. Not surprisingly, December 2008 has led the board in terms of gains this week, as it is trying to keep up with the record setting performances in the grain market.
The spot wheat contract rallied to a new all-time high of over 9 dollars a bushel yesterday before giving back about 50 cents, while Dec'08 wheat continued to trade at around 6 dollars a bushel.
Soybeans had a strong week as well, as the spot contract re-tested the July high of around 9.45 dollars a bushel, while Nov'08 beans closed today at 9.18. Even though corn prices have not been quite as strong recently, the Dec'08 corn is still trading near 4 dollars a bushel at this point in time.
Compared to these unprecedented forward values in the grain market the price of cotton still looks relatively cheap at 72 cents, although we haven't seen these levels in 3 ½ years. But hedge funds are betting on a much more impressive performance by cotton if the current open interest in call options is any guidance.
As of this morning, there were 9'192 Dec'08 call options open between the 80 cents to 1.00 dollar strike price, with 4'893 of those in the 1.00 dollar strike alone.
marketing@alchempro.com
