Cotton future may rest below 50c mark till December
23 Oct '06
3 min read
The Shakespearean phrase, "Much Ado About Nothing" is an excellent description of the activity in the cotton market this past week.
The market continues to work the 48 cent to 50 cent range, apparently headed nowhere for the near term. Certificated stocks continue to grow, export sales have yet to catch on in a major way, and domestic consumption is as lackluster as expected.
The New York December contract, bogged down in these tracks, will see little change as it moves to first notice day a month from now. The downside risk is four cents, but any upside potential awaits a solid close above 50.50 before the technical traders will flip to the buy mode.
For now, speculators appear to be content attempting to push the market below 47 cents.
While export sales were a bit anemic this past week, sales to appear to be building this week, although not in the numbers needed. Yet, the market spent most of the prior week below 49 cents, as it has done this week.
Just as last season, exports again hold the price key. Until exports improve, the forty-something cent price level will be with us.
With all of this, the market has traded higher on five of the past six days. Nevertheless, there is concern that the last few days have seen limited volume and physical sales have been slow.
With Thursday's December close just 42 points above the contract low, it is a bit early to think that the market is turning around.