Cotton futures were initially called to open around 20 lower this morning, instead ticking 10 lower as locals and commercials absorbed any fund buying on the opening. Spec buying returned to the ring after the re-opening though.
Following yesterday's 53,000 bales ++ de-certification, this morning's report was delayed which prompted the floor brokers to conclude that there were so many bales being decerted that the report could not be released by the exchange.
March gained tremendously on the other contracts with the spreads narrowing noticeably in the March / May in as tight as 50 points premium March. The exchange release of the cert stock report was something of a trigger, with no bales de-certing whatsoever.
On cue the market reversed through 55.0 cents having gained as much as 20 to 50.24, but again this area was too much. Prices slid rapidly towards the 54.50 technical support, where they were in fact well supported for the rest of the session.
The local traders were the fodder today, scrambling out of longs on the way down for the most part. In the end prices finished with losses of 41 in the March and 86 in the May, again reflecting this spread strength. Estimated volume was decent at 15,000 lots.
Tomorrow morning's US export sales and shipments should replicate last week's quite nicely. Expected sales and shipments should fall around the 200,000 bale mark combined for upland and Pima.
March exhibited a little weakness today having once again failed to take out upside resistance above the 55.25 level. Prices reversed and only managed to hold up thanks to support from the 9 day EMA which currently rests at 54.48.
Until March can take out the 55.50 overhead resistance the overall uptrend will start looking somewhat shaky.
The near term expectation is for more consolidation as the holidays near and March starts to explore the range of the current uptrend channel between 53.75 and 55.75.
Momentum has dipped a little, but is still maintaining it's trend higher currently at 58.23 on the RSI.
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