Cotton was mixed on the open to slightly higher as cotton tried to build on the gains from late last week after the long Labor Day weekend. Other markets were slightly higher as well overnight as the market stayed in a fairly narrow range most of the day on light volume.
Futures were only 17,000 contracts and options 10,000 as the market looked like it was waiting for more information to continue testing the highs. Cert stocks fell again today another 23,000 bales to reach 523,000 bales and is also serving as a good stimulus for nearby prices.
We are expecting the specs to have reduced their position from 19.5% by a small amount last week as they may have added to it on Friday. This explains where the new spec buying entered the market on Friday as we tried to push limit up into good fund buying.
The broader markets were very strong today as well as the stock market continues to be stable and closed up again today. Energy and grains found very good support today as well with wheat continuing its record breaking performance at all time new highs locking up the limit above 8.00 usd/bu.
Technically, the market will find some resistance at 61.85 as it has the last two days, but we are expecting another good export sales report this week and possibly enough momentum to break the 40 day moving average at 62.38. With such strong commodities currently, we would expect this move to go higher and run into scale up trade selling above 63.00.
Business will obviously be very slow nearby, but there will be further pushes to the upside as the short term looks like it wants to continue testing the high side.
marketing@alchempro.com
