Cotton future may rest below 50c mark till December
23 Oct '06
3 min read
As suggested last week, we will likely see the 50 cent mark as a top hat well into November, possibly longer. A positive sign would be to see the market jump to a close near 50.50 cents.
Certificated stocks continue to be a significant thorn in the side of the market. With cert-stocks on Thursday sitting at 752,013 bales, a record, and another 50,279 awaiting review, certificated stocks are climbing toward one million bales. With certificated stocks this high there is a greater and greater tendency to view New York as just another cash market.
Too, with stocks nearly one million bales, the stage is being set for March futures; once December futures are off the Board, to slip down to the trading level of December, that is, possibly well below 50 cents. Nevertheless, the key to the price lock rests with the export market, and specifically with China and to some degree Turkey. However the demand from China potentially dwarfs that of all others.
Funds will soon begin moving their record positions, rolling from December to March. Thus, December will continue to be pressured. In the absence of exports picking up soon, mills will continue to "wait out" the market and December risks fall below 47 cents. The path looks to be lower.
marketing@alchempro.com
