Market was trading higher electronically as much as 45 pts higher as the Z'07 gap was filled to 64.30 before the opening. However, the market started to come off close to the opening and continued to fall quickly to make a daily low at 63.30 before working back higher.
There was some buying on the close and some short covering, but overall the volume was very light. Futures of 10,000 contracts and options of 9,000 represented another light day as the market traded in a narrow 100 pt. range.
Market has bounced 200 pts off the lows from the correction, but seems to be struggling to go higher. Market seems to be waiting for new information to define the nearby trading range, but demand continues to be weak.
Export sales should be around 100K in new sales and 400K shipments as we near the end of the 06/07 marketing year. We seem to be in line with the USDA estimate of 13 million bales in export sales for this season, but still hard to believe we will ship 17.5 mb's in the next season.
Technically the Dec'07 has broken below the 9 day moving average and RSI is creeping back close to 60. Demand remains weak, new crop production is improving and the specs are heavily committed to the upside.
The market seems to be heavy on the long side and may continue to trade sideways short term, but may take some more downside before we uncover good buying volume. The top of the gap at 64.30 from Friday remains a key short term top until it is broken and then we will find more scale up selling at 65.00.
marketing@alchempro.com
