The trade of course still hopes for the reverse scenario, whereby prices were to fall first and allow them to escape relatively unscathed. However, for that to happen spec longs would have to get spooked out of their positions and that doesn’t seem likely at this point.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
We still believe that May and July are loose cannons that should be avoided if possible, as they are likely to cause further mayhem in the weeks ahead.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
The second part focuses on the December contract, which as the transition month between current and new crop needs to be looked at as a ‘hybrid’ in regards to pricing. Since the US is basically going to sell outthis summer and mills have some pent up demand from trying to avoid expensive current crop prices, it will take some time for the supply pipeline to fill up again.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
We therefore don’t expect to see much price pressure before the end of the year, which is why December has the potential to move higher and to extend its premium over March and later contracts.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
We believe that March 2015 will be the first contract to fully reflect a more ample new crop situation. If new crop supply/demand expectations materialize and China curbs its imports next season as anticipated, then stocks in the ROW will start to grow and thereby put pressure on prices.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
US and Chinese futures are already reflecting these expectations. For example, the January 2015 contract at the Zhengzhou Commodity Exchange, the month with the highest open interest, closed at just 16’010 RMB/ton, or around 117 cents/lb. This is about 2’700 RMB/ton (20 cents/lb) less than the spot month and is it also 1’240 RMB/ton (9 cents/lb) below the just revised Reserve auction price of 17’250 RMB/ton.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
In summary, both China and the ROW are adjusting to a new price structure next season and this transition will likely take place in several phases.
Although this week's trading action may have felt like a victory for the bears, the chart reveals that the market has actually moved sideways in the #
Plexus Cotton Limited
marketing@alchempro.com
