The early call this morning was for March to open around 20-30 lower with a distinct absence of bids noted under the market. In turn it did manage to open around 25 lower, whilst the deferred months opened anywhere from unchanged to 10 higher, prompting a firmer re-opening.
There was a distinct lack of fundamental news over the weekend to trade on today, and as such the majority of activity revolved around some hedge fund buying that sporadically entered the pit and pushed prices higher. Soon after the re-opening this buying was seen to lift March to as high as 54.80. Trade were spotted as being light sellers on the way higher, whilst the March / May spread remained a little confined between 80 and 90 points premium May.
Later in the session some further fund buying was noted, but in the environment of a generally lethargic marketplace, prices managed to settle off their highs at 54.53 basis March. Active months finished 11 to 27 points higher amidst a volume of cotton at a spread that make new crop competitive will be very bearish on the U.S. ending stocks and eventually on NY.
Tomorrow morning's spec hedge report is expected to show a slight decrease in the spec long, mostly on the back of last weeks sector wide price breakdown. Last weeks measure was 7.4% net long of open interest.
Technically, the march contract is starting to consolidate itself having fallen a swift 3 cents from the highs last week. The 57 cent area high also meetslonger term overhead resistance, which adds weight to the turnaround and hence the end of the recent up channel.
Momentum is back to neutral at 49.17 on the RSI having reached overbought levels last week. Meanwhile the moving averages (9 EMA and 50 SMA) are beginning to reconverge which could again negate the original rally back from 51 to 57 cents.
marketing@alchempro.com
