Cotton futures started out being called around 20 lower initially this morning, though with decent commercial buying on the opening were able to open unchanged.
Today figured to be a little whippy, with lots of global suppliers awaiting the last possible moment to fix on call December sales to merchants.
This weight on the December, which sees first notices tomorrow, saw the Dec / March spread widen out considerably, beginning the day at 425 and finishing the day at a whopping 484.
Given the cost of the highest penalty cotton is around 575 between Dec and March, there could be a lot of the existing cert cotton delivered. There was quite a bullish bias to all contracts not called spot today, particularly through the options pit. One of the major merchants was a buyer of nearly 3,500 March 56 calls for 55 points.
In addition the same group was reputedly a seller of 600 march 51 puts. This friendly bias was played upon by the locals, who sense a colossal amount of spec buy stops looming above 52 cents in March.
Although this level was unable to be visited, the persistence kept a firmness to the March contract forward with these contracts settling between 20 and 44 points higher. Estimated volume today was again very solid at 32,000 lots.
Market talk was that one of the large Memphis merchant's is to be a large taker, but eyeing up today's notices the said merchant was actually a large deliverer of the December. Dunavant commodities issued a total of 924 lots, whilst a complete bevy of merchants, funds and locals alike were all matched up as stoppers.
marketing@alchempro.com
