Other than a mid-week hiccup that carried prices to their best levels since the end of November – cotton prices were hung in the throws of indecision most of the week. Cotton chopped either side of unchanged until the final moments Friday before shooting into new highs for the week.
In fickle fashion, cotton traders attention was never on any one thing for very long. In fact, Cotton prices reversed directions each day of the week and until the last half hour Friday, it wasn't clear whether cotton would even finish with any gains at all. However, in the end, March finished the week with 130 point gains and new highs for the week. December 08 ended 128 higher for the week
In other markets, nearby soybeans closed 36 1/2 to 37 1/2 higher. On the other hand, new crop soybeans actually posted a small loss for the week while its competition, December 2008 corn, was higher.
However, new-crop corn did not gain as much as the nearby contracts, which may have been in reaction to Thursday's passing of an energy bill which is clearly bullish for ethanol, pumping production up to 36 billion gallons a year by 2022. March corn closed 21 higher and December 2008 corn closed 10 higher.
When the Chicago March wheat contract takes over the continuation chart Monday at $9.79 1/2, it will be a new all-time high on that chart. The March/May futures spreads are bullishly inverted at the Chicago, Kansas City and Minneapolis exchanges.
That means that on Monday, every old crop wheat contract in the U.S. is at a premium to any further-out contract, implying that commercial buyers are eager to buy wheat in this marketing year. For the week, March Chicago wheat closed 58 higher, March Kansas City wheat closed 49 1/4 higher, and March Minneapolis wheat closed 73 1/4 higher.
According to the spec/hedge reports the last few weeks, the speculative communities view of cotton has become much more two sided. The last few reports have shown an increasing number of speculators moving to the short side. In fact, despite skyrocketing grain prices, increased talk of economic recession have lured over 10,000 new spec positions to the short side of cotton futures over just the last two weeks.
The USDA supply/demand reports for December, which often times triggers strong reactions, provided nothing but fine tuning of the numbers in a variety of cotton areas around the world – certainly no surprises and little fresh food for either the bulls or bears.
marketing@alchempro.com
