Passengers please return back to your seats, we have just turned on the fasten seat belt sign. Wow, what a day as the overnight sessions were all lower including cotton down almost 100 pts. The stock market and other foreign markets were off heavily overnight which fueled a red day in all the commodity markets.
Grains were no exception with soybeans touching limit down during the day with heavy losses in energy and metals as well. Volume was impressive at 45,000 futures and 50,000 options as the market locked limit down. Fundamentally, the market had reason to be up today as the sales and shipments were friendly and weather issues were still a concern.
Total new sales reached almost 400k which was a significant improvement to the 135k last week, but shipments were lower at only 350k compared to 400k last week. Rains started hitting the saturated south Texas region last night and were heavy all day long, but it looked like the heavy rains went North of the Coastal Bend area which has a much higher percentage of open cotton. Also, hurricane Dean is looking like it might not even reach the Gulf of Mexico.
Technically, the market has no downside support and the only positive feature came as the stock market was able to rally back from losses over 340 points to close down only 15 pts. This was a major correction that may add some stability to the overnight markets.
However, there was a glitch in the electronic ICE market today as cotton was allowed to trade below the 300 point limit down level. That caused several bad fills which forced the electronic trading to be suspended until open outcry begins tomorrow 9:30 CST.
FND for September options is tomorrow and we will wait to see the reaction overnight in the Far East to see if the markets can start to stabilize or we continue the downward trend.
marketing@alchempro.com
