Cotton Futures began the day around unchanged, with some early support in the December contract. The sensitivity of December being at options expiration was enough to rile a few traders up, and with some weakness coming in after the reopening, prices soon began to freefall.
Although there were commercial offers around the 50.00 area, the real pressure came out of the long locals and soon fund sell stops were elected in both December and in particularly March.
Overseas fund selling was also noted to curb values down to the 49.00 before it located significant commercial support.
Prices just bounced off this 49.00 support for much the rest of the session, with the lure of the 49 strike somewhat appealing for the options expiration.
Spread trading was typically heavy in the midst of the GSCI roll, with the Dec/March again being painted wide by the index fund managers.
Estimated volume was massive at 50,241 contracts. Despite this unbelievable volume it still remains very hard to get sizeable bids or offers in the outright contracts.
The weekly classing report in the US showed a further 1.69 million bales classed, leading to a total season volume of 9.997 million bales, of which 72.3 percent is of tenderable quality.
This will be the last analysis for the December 06 contract. With Options exercise and with March taking on the majority of the open interest, we will revert to analyzing March 06 contract from Monday December continues it's sideways' pattern between 48.00 and 51.00, though any forward momentum was halted today by the outside day reversal.
marketing@alchempro.com
