Market bounced back after closing down hard yesterday as overnight export business picked up. However, volume again today was very light with futures on the floor trading just over 1,500 lots of a total 7,000 contracts.
Option were also light with only 2,500 contracts as several members of the floor were unable to get in today with heavy flooding in the NY area affecting the morning rush hour traffic. We are not expecting any big activity tomorrow either as the market wants to wait for the USDA crop report on Friday to give us some further direction.
Grains closed higher across the board as well as the stock market as we are seeing some more positive feelings about the Fed's decision to lower rates down the road.
Soybeans were up 15 cents to close SX7 @ 8.78 $/bu as corn was up 6 cents to close CZ7 @ 3.58 $/bu and wheat rallied 18 cents to close the WZ7 above 7.00 $/bu. Grains will continue to be supportive of cotton as we focus on acres for the 08/09 crop.
Fundamentally, the crop news for cotton and grains in the U.S. is positive, but August is a very important month to finish off the crops in cotton, corn and soybeans as we look forward to the fall harvest.
Technically, we closed electronically below the 40-day moving average @ 64.43 and the market is at a very susceptible level for further downside. Analysts are estimating a 17.7 crop number to come in on Friday which is only 200K larger than the current number, but will add to ending stocks.
As far as other changes, we are not expecting any big surprises, but an overall neutral to bearish report. Exports tomorrow should be close to last week at 300k and 400K shipments. We are seeing demand under the market when V'07 closes near 60.00 c/lb.
marketing@alchempro.com
