ECOM daily cotton market recap - December 28th, 2006
29 Dec '06
2 min read
Market was called higher and made a good effort all day to stay on the offensive which stalled out at the 5700 level based H'07.
Earlier in the day they was some more H/K spreading which widened out to 65 points at the highs, but came in on the close with the strong finish in H'07.
The funds seem to be set to end the year on a positive note and add to their long position which should be getting close to 10 percent. Volume was light most of the day estimated at 8,000 contracts, with the main feature being fund buying on the open and close.
Export sales come out tomorrow but not expected to be outside the average range of 150 sales and 150 shipments. There was another 250,000 b/c redeemed from the loan last week, which brings the total to almost 2.9 million bales of which 80 percent has been redeemed in the last 4 weeks with an average spread of 1100 points max.
This spread seems to be able to free up loan cotton that is needed for nearby, but will probably have to be wider to start popping much larger portions.
We will keep an eye on the A index as it goes through a new year's transition picking up some new quotes and see if it stabilizes or keeps going higher next year which will be a key factor in continuing this rally into 2007.
Technically, we are still in a bullish trend channel. 5700 will be a tough level to break through but we should see another strong performance from funds tomorrow as we wind up the end of theyear.
Trade scale up selling will remain in order to prevent the market from running away, but should see another up day as the H'07 continues to be driven by the rising A index and nearby tightness to redeem cotton.
marketing@alchempro.com
