Cotton market remain stagnant due to lack of demand
23 May '08
2 min read
Growing cert stocks along with stagnant open interest and lack of demand equal a quiet cotton market. Demand is still hand to mouth and the board is paying merchants to hold cotton with spreads from N'08 to H'09 as wide as 14 cents! That equates to 175 points a month and is the result of record cert stocks approaching 1.5 million bales and growing.
Volatility has also taken a hit and with July FND approaching, we may see open interest also fall back below 250k. Cotton will most likely trade sideways until options expire and then we may test the lows. Cotton can find good demand with the spot month under 70 cents, but the upside is limited as well.
marketing@alchempro.com
