The market was fairly quiet most of the day until a friendly report on 08/09 acreage was released close to 15% lower than last season at 9.18 compared to 10.88. Along with the senate proposing a 5-year farm bill which is expected to be very grain friendly with much fewer incentives for cotton.
This new farm bill will start to effect the 08/09 crop, along with the higher prices from competitive growths, cotton acreage is expected to lose another 10-15% which was pretty much in the market. However, this information was enough to spark the specs to push through resistance at 65.50 and set a new short term high at 65.90.
Volume was above average at 22,000 futures and 14,000 options as the stock market continues to struggle. The dollar found good support today and made a short term high as grains found good support as well.
Metals and energy seem to be moving sideways and we will see if next week the cotton market can hold the top of the range at 66.00 or we test the 67.00 c/lb. level. Technically, we are making progress and the specs seem to be adding back to their position as open interest is building each day.
Technically we broke the resistance at the 65.50 cent level, and closed near the high above the 9-day moving average. RSI is back close to 50% and the specs look like they are adding back to their 16% long position. The demand has been steady but not overwhelming as the market looks like it cannot find enough ammunition to retest the contract highs any time soon at 70.50.
We may see the market trade sideways in a 63/67 cent range as we get through the holidays and into the new year. We expect heavier scale up selling from the trade as we move higher and will monitor the specs.
marketing@alchempro.com
