Futures continued their brutal downward spiral of late, again shedding heavily on the day. The market was called to open around 40 lower as large market on opening fund selling hit the ring.
Any overnight business out of the trade was waited on to be hedged, after-all, the momentum is all going to the downside of late.
Trade buying was noted early around the 50 cent area, and good two way trading was noted around this level. Spreads widened out some today, with the Dec / March moving as wide as the 375 having been in as narrow as 332 late Friday.
Trade was seen buying back some out of the money calls in both Dec and March, mostly in short liquidation, though there was also some good 1x2 Dec 50p / march 60c bear fences trading at flat.
Fund sell stops under 50 cents as well as market on close selling forced values down to the lows prior to the close, with March settling down 41 and Dec down 73. Estimated volume was reasonably light at 11,000 lots.
Today's US crop conditions were improved markedly from last weeks, moving from 84.6 to 85.7 on the index, the 3rd consecutive improvement. Notable improvements took place in Texas, California and Mississippi.
The crop has 82 percent of bolls open compared to the 5 year average of 79 percent whilst 24 percent has been harvested compared to the 5 year average of 19 percent. We continue to maintain our crop projection of at least 20.0 million bales for the US.
Technically the December contract continues to look impoverished. Today's move both broke psychological support at 50.00 cents but also broke the recent down trend channel, which may in fact indicate that the trend is oversold, as it has lost it's orderly control.
marketing@alchempro.com
