December cotton contract offers weak outlook : ECOM reports
05 Oct '06
2 min read
Futures were initially called to open unchanged this morning with little bid or offer from either camps. Notable export business was reported for most growths overnight though, and this gave a supportive tone to the actual opening, which ticked prices up 40-50 points.
Trade was the notable buyer, with locals also scrambling their way out of overnight shorts, with most expecting a run under 49 cents this morning.
Instead Dec was soon pushing 50 cents, though was unable to penetrate this level and soon began edging back towards the unchanged level. Notably the Dec / March spread, which has been very volatile of late, narrowed in noticeably.
It looked as though the trade was lifting hedges in December and putting them on in March through both outright futures selling as well as bearish March options strategies.
This spread narrowed into 325 today in any case. Trade buying was joined by local short covering in the second half of the session, as for the second time today the locals found themselves short at the wrong level.
A close on the high resulted, importantly above 50.00 cents in December Estimated volume was decent at 13,294 lots.
Tomorrow's US export report could see some pretty decent sized sales in it, given the price level of the past week. Our estimations are for sales around 250-300k bales and shipments around 100,000 bales.
Technically the December contract continues to look weak, although today was a day of relief as it bounced nicely from a succession of contract low sessions.
marketing@alchempro.com
