Market failed to find any follow through after trading higher overnight, but ran into heavy scale up trade selling. Contract rolling from Dec to March was the main feature again today with the spread reaching 475 pts before it narrowed in on the close.
Open interest fell 15,000 contracts in Dec'07 yesterday to reach 55,000 with 5 business days left. Volume was strong but below average with only 33,000 futures and 7,000 options as the market gets closer to FND.Market failed to find any follow through after trading higher overnight, but ran into heavy scale up trade selling. Contract rolling from Dec to #
Export sales tomorrow should be healthy with some last minute sales for Dec shipment taking place. Grains enjoyed a strong day as the dollar was under pressure again which helped oil to take back some of the losses from yesterday. The stock market tried to build on its big gains on Tuesday, but eventually failed on the close similar to cotton.
The market looks vulnerable to further downside, but there should be good scale down buying against on call sales based Z'07. However, there seems to be some bearish technical and fundamental news starting to threaten cotton even though soybeans are showing good strength. Take a look at the graph on page 2 illustrating how soybeans and wheat have been separating recently.
Technically, if the market holds near this level to lower, the 9 day moving average will cross the 50-day to the downside for the first time since the market had a 12 cent retracement from the highs set in July’07.
Based on the large spec long position, growing certstocks and lack of demand over the next 6-8 weeks, as long as the dollar can stabilize and oil continues to weaken, cotton is vulnerable to test the mid 60’s based H’08 and sparking more technical sell signals.
The stock market looks like it is stabilizing which should strengthen the dollar and weaken commodities.
ECOM USA Inc
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