Majority of NYF Thursday session range was traded below the 9 day average. Supported by the higher prices in grains and crude oil, session opened up to trade steadily higher and settled with decent gain from yesterday.
Noticeable trades came in one hour prior to close when funds were actively engaged in front-back cover month switches, which pushed the December 07 - March 08 spreads to 424 points lowest and December 07 - December 08 spreads to 1,075 points. There's also news that possible crop reduction is estimated in India and Pakistan.
The main reason for the crop reduction seems to be insect attack. As Pakistan comes back from their Ramandan holiday, they are re-evaluating their crop size under the pressure of insect attack and extreme heat. The largest crop drop in India is in Gujarat, where the main export variety of Shankar 6 is planted.
As these estimates are just coming to light, we'll have to wait to find out its effect on the market price. This morning's US export report was of little impact to today's market but better than expected. New sales were slightly improved from the week before with 206,600 running bales upland and pima combined.
The major buyer was Turkey with 80,800 bales, the majority of which might have been conducted during the 66th Plenary Meeting of the ICAC in Izmir. Shipments were 173,800 running bales combined with 46,900 bales leaving for Turkey and 38,800 bales leaving for China.
Technically, a strong close on today's session provided some correction to the chart. The trading range has gradually moved higher and narrowed to between 62.20 to 65.60 over time. With 10 trading days to expiration on December contract options, volatility has come in and settled at 21%.
The decertification of more than 60,000 bales from yesterday came in as a surprise and might have supported today's market. Spreads between December 07 and forward cover months have widened beyond full carry. As harvesting starts to settle in, any news in the demand side appears to be even more important.
marketing@alchempro.com
