Another green day as the market gets a corrective bounce after falling 8 cents in 5 sessions, it managed to gain back 200 pts in the last 2 sessions. Even after the nice bounce in the stock market off the lows on Thursday, cotton only had small gains on Friday.
However, looking at the overnight trading activity, cotton had the best gains on Monday morning as it was up 2% or 130 pts before open outcry started. There was also rumors of business over the weekend as well as a buy recommendation from Goldman Sachs and Jim Rogers which added to the oversold technical picture in the cotton market.
The Fed action from last week continued to support the stock market as it closed slightly higher on the day. Energy was down and grains were roughly unchanged as cotton traded on above average volume with 21,000 futures and 20,000 options. Crop progress came out this afternoon and showed some deterioration in the crops in Alabama, Arkansas and South Carolina.
We will have to monitor Hurricane Dean, but at the moment it is heading due West toward Mexico and does not look like it will add moisture to the already saturated South Texas crop. We will be anxious to see the spec hedge report tomorrow from last week's 28.4% long position.
This will play a major factor in how much the specs shortened their position last week in the big pull back in NY. We will also be watching the sales and export report on Thursday as the market tries to consolidate and determine the short term direction.
marketing@alchempro.com
