Tomorrow morning will be the release of the USDA world supply and demand estimates, with 100 percent of market participants expecting and in fact trading on a very bearish report.
Increases are expected for US ending stocks via reduced domestic and export use, Chinese ending stocks via higher beginning stocks and production, whilst there should be reductions in Brazil and Australian production.
The ICAC and Cotton Outlook are ahead of the curve at present having already raised the Chinese beginning and ending stocks, it will be just a question of how much a leap the USDA takes with their adjustments.
Technically the December continues it's decline, in perfect bear trend formation. Whilst it is enclosed by a now 3 month long bear trend channel, it is at the lower end of this channel and in need of a corrective bounce.
Momentum and trend following indicators are in oversold territory, in the case of the MACD they are at extreme levels. Price action will get a lead off the USDA report tomorrow, and although we anticipate this will be bearish, it could well be a sell the rumor buy the fact type scenario.
marketing@alchempro.com
