Cotton futures were up slightly overnight as well as the stock market and grains. This trend continued during the day as the grains and the stock market worked themselves higher. The stock market closed up over 1% to add to a 5 day up streak and grains also had respectable gains as well.
Cotton struggled a bit on the open as it never was able to reach the high set on the electronic overnight. Option trading on the open had several bearish trades which forced the futures lower but found good support at 58.00. Volume in futures was just under 17,000 contracts and options were strong again today over 22,000.
Export sales and shipments tomorrow will be watched closely to see the amount of business which was completed on the break in NY last week down to a low in V'07 near 55.00 c/lb. Estimates in the industry are coming in between 350/450 compared to last weeks 395k.
Weather concerns are still popping up in the hot and dry Delta and Southeast as the crop comes down the final stretch. We are receiving good reports from China, Pakistan and India that crops are looking better than estimated and ginning will start picking up at the end of August.
Technically, the market looks to be setting up for a front month range between 55-57 short term as the Dec'07 finds support between 57- 59. We will continue to work this range nearby as we are near the middle of the range. RSI has trimmed back up to the mid 30's and the specs still have a significant long position that may put a ceiling on the market short term.
The stock market and grains are holding firm so it looks like there is good support under the market and especially if we get a good sales report tomorrow.
marketing@alchempro.com
