Market was expected to open higher after such a good close yesterday, but there was some selling on the open which actually opened 20 lower and fell as much as 50 pts before it found support at 56.10.
The main feature on the open was selling H'07 and buying K'07 which spread out to 50 pts at the widest point, but made up the majority of the weakness on the open.
The volume was descent, but options were also on the bearish side so that did not help the market.
Specs were only 6.6 percent long today, which means that some of the buying last week must have been trade related. The A index was up 100 pts today which raised the A index daily to 63.10 and the daily AWP to 47.00 usc/lb. which will start to impact the new AWP on Friday.
The big increases were related to the two U.S. quotes that are in the A index, but will be replaced starting next week with two cheaper southern hemisphere quotes that will reduce the A index 100 pts.
This is a very important issue since the trade have to remain scale up sellers and basically NY will have to go higher as long as the A index remains firm.
Technically, the momentum is to keep testing the highs with some pull backs along the way. There is plenty of trade selling waiting at 56.90 scale up as that would bring an 11.00 point spread to redeem cotton this week.
However starting Friday, the next target will be closer to 57.60. This will have a lot to do with how the new quotes affect the A index starting in January. Range still seems limited through the end of the year, while the upside momentum remains firm.
marketing@alchempro.com
