Overnight grains were off slightly and before the stock market had a chance to open, there were concerns in Europe over the credit crisis in the U.S. which immediately impacted the equities as well as spilling over into further losses for the commodity complex The stock market continued to get hit harder as it closed near 3 month lows which also pushed cotton to a 5-week low.
We gapped lower on the open outcry and found some support near the 3 week low at 62.00, but eventually broke through that to find a low at 61.51 and 59.50 V'07. Volume was very good today for the first time in several weeks as futures were estimated at 32,000 contracts and 27,000 options.
The cotton market found some support on the lows as those levels also generated some business the last time we were there three weeks ago.
There may be good business overnight, but it is obvious the export market was quiet last week while V'08 traded near 62/63 cents as the export sales today were very disappointing. New sales accumulated to 135K and shipments were right at 400K.
Grains closed unchanged to lower, but the follow through of the stock market and energy prices tomorrow will certainly have an impact along with the S&D numbers for cotton and grains. We still see only small changes in the U.S. with production up slightly higher and maybe a small cut in exports.
Technically, the market broke the 50-day moving average today and even though it closed above 62.25 just barely, the market is looking very vulnerable if we have a neutral to bearish USDA report tomorrow. RSI is only 43% which is far from oversold and the specs are just starting to liquidate positions which are also being pressured from the weak equity markets.
Grains, energy, cotton, metals and the stock market have all put in recent highs and seem to be in a downward trend short term which may not have found the bottom yet.
marketing@alchempro.com
