Market traded higher electronically based on friendly overnight markets and more specifically with another 30 cents up the limit move in wheat.
However, after the Dow opened lower on negative consumer confidence news and lagging home sales, the cotton market came off quickly to set the lows early in the session near the 60.50 level in Z'07.
Volume was average with 18,000 futures and 14,000 options as the market gave back most of the gains from Friday's run to 61.80.
Specs increased their long position for the first time in 5-weeks as they moved from 19.5% long to 22.2% long. Crop progress reports improved last week across the board and more beneficial rains are arriving in the Delta this week as we get closer to the harvest.
The stock market along with beans and corn were lower today as the market gave back some of the gains and may have had a negative influence on cotton.
We still expect a beneficial export sales report on Friday and would not be surprised if we make another test of the highs once the equity markets stabilize. Will be interesting to see how the overnight markets react to this pull back, but doubt we will see much new business.
Technically on the open outcry chart, we have a triple top near the 61.80 level which is roughly 60 cents on V'07 and 70 cents for Z'08 which is forming strong resistance to a move higher. Cert stocks fell again slightly and the AWP is flirting with 51.00 cents so the market still has an incentive to go higher short term.
However, we would start to see stronger trade scale up selling if we could get the Z'07 contract above 63.00 c/lb. That will take some cooperation from corn, soybeans and the stock market.
marketing@alchempro.com
