Market was up slightly overnight with grains and the stock market as well. Export sales were on the high end of expectations and the stock market opened over 100 pts higher. Everything was starting to look more positive as we continue to fight the hot dry weather in the Southeast.
However, cotton was still undecided and under very light volume traded in a narrow range up 20-25 pts most of the day. Futures were under 10,000 contracts and only 7,000 for options in a very weak trading day that closed to the upper end of the weekly range between 57.50 and 59.38.
Export sales were very optimistic with another 400k which matched last week and shipments of 325k that was slightly lower than last week. China and Turkey remained the two big buyers with both purchasing over 100k in sales last week.
This was expected to be a good report after a 300 point break in prices last week which triggered good demand for sales based V'07 which reached as low as 55.00 c/lb.
The stock market started to come off and even went lower before closing unchanged as the market is stable but cautious to move higher. Grains also had a neutral to higher day as we start getting to the end of the harvest for the Northern Hemisphere.
Technically, we are forming a flag on the chart as we continue to trade within our limit range that was made last Thursday. The gap down on Thursday has made the upside resistance at 59.50 and the downside at the weekly low of 57.50.
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 as we get closer to harvest.
marketing@alchempro.com
