Cotton Futures were called and in fact opened around unchanged initially, as traders didn't really know what to make of the mixed signals in the USDA report.
This morning's US export sales and shipments were fairly vanilla, with 175,600 combined sales and 129,500 combined shipments both in running bales.
Whilst the bottom line for the global ending stocks was relatively friendly, the 16.2 million bale US export estimate just doesn't fly, in fact most within the trade believe that 14.5-15 million will be the final range.
Prices were fairly well supported early, mostly from bull spreading in the Dec / March. The sensitivity of the locals, who are heavily short Dec against long Marches shows whenever this spread narrows, today forging a rally to take back much of yesterday's losses.
The spread typically dominated proceedings today, with outright direction being dictated by spread direction.
Early in the session this spread narrowed to the 380 level as commercials as well as locals were good bull spreaders.
December and March found good commercial resistance around 50.00 and 54.00 respectively.
Late in the session prices eased off their highs as the GSCI end of session price painting took over. Despite trading around 395 going into the close the spread settled at 404. Estimated volume today was again huge at 41,497 contracts.
This morning's USDA report was intriguing. The USDA pulled their usual surprises, reducing global beginning stocks by 900,000 bales.
marketing@alchempro.com
