Market was trading lower electronically as it continued to feed off of the recent break in cotton prices from late last week.
The market tried to test Friday's low at 61.90, but found support at 62.20 and then rallied to catch a few locals short as the market tested the high end of the range at 62.80.
Overall, it was a light day after several busy sessions last week as the market tries to consolidate after a 7 cent correction from the highs. Volume was light in futures with 12,000 futures and only 6,000 options.
We are expecting a cut in the spec hedge position tomorrow for the first time in over 9 weeks from a high of 32.8% last week. Business still remains quiet but there are rumors of sales being done over the weekend after the big drop in the Dec'07 contract.
We will see some demand from mills who need to finish covering their third quarter as we wait on the new crop to arrive. Crop progress remains positive in the U.S. as we start to get into the mid summer hot and dry period as we try to finish out the crop.
Technically the Dec'07 is looking much healthier with RSI back under 50 and there seems to be some nervous bulls who may continue to take some profits on rallies.
However, there will be scale down support under the market starting at 62.20 as well as resistance at 62.90 which is now over 1.00 usd lower from the highs.
We will watch this lower trend line closely in the soybeans as if it is broken, we could see further downside in corn and cotton.
marketing@alchempro.com
