A pretty firm and active session to start off the new year! ICE electronic was trading lower early morning, but market quickly firmed up upon pit open. Overnight higher grains and crude oil trading have set the market expectation for a strong session. Grains didn't fail the market's expectation yet again, wheat soon hit limit up, and soybeans was close to limit up.
Both soybeans and corn set a new record high today. Crude oil is challenging 100 dollars a barrel. Paired up stronger commodities market and weaker dollar, cotton is following and traded around 60 higher for the majority of the session in the front cover months. All months settled at the day's high, with new crop December contract being the most impressive at 144 points higher.
As crude oil reached 100 dollars a barrel for the first time, it's interesting to see how the new energy bill signed by President Bush will affect the price. The new legislation requires automakers to increase fuel efficiency by 40% to an industry average of 35 miles per gallon by 2020.
It also requires refineries to increase the use of ethanol from about 6 billion gallons a year to 36 by 2022. It sounds like the increased ethanol demand will push the corn market to an even higher level. And cotton prices will likely follow the outside commodities market.
Technically, we are in the overbought area with RSI a little over 70%. The 9 and 50 day moving averages have crossed each other on Monday. The nearby March failed to break through 69 cent level today, but may have an opportunity to make a run at 70 cents nearby.
As no fundamental news is around to trade on and as long as the outside commodities markets are strong, cotton will feel the support and continue its upside trend. Specs are currently at 25 percent long, which could still be increased on their continuous investment interests for the new year.
20240830145952.gif)
20240925092649.png)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
