Futures started out higher on the electronic exchange, with a good bid across the board. May led the way, which continued into the open outcry session, touching off at 54.45 within the first hour with a light spec bid under the market. The Wall Street Journal published a bullish argument for cotton prices, saying they had to rise to keep up with competing commodities.
Interestingly though, there was a degree of co-op selling above the market, particularly in July. This selling was enough to put off the locals, and once their selling began to dominate, the gains were quickly given back and turned into across the board selling. Prices quickly slipped through yesterday's lows unleashing a few sell stops out of the specs before stabilizing throughout the mid session.
Mill support was noted at these levels, but the selling had been light in any case, resulting in an attempted rally before late in the session selling closed the market right around the lows. Options activity was quite vase, with good two way activity throughout the session. A fund was a notable buyer of 1000 of the Dec 70 calls for 90-95, whilst one of the major merchants sold most of these to them.
Another merchant group was a seller of 900 May 54 calls for 70-85, and another yet bought 500 March / Dec 62 put spreads for 45 credit to the Dec. Volatility is starting to really diverge, with Dec moving out beyond 22% and May trickling along at 15%. Estimated volume today was decent at 21,752 lots.
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