NY futures traded sideways this week, with March edging up 62 points to close at 68.41 cents, while December added 30 points to close at 76.70 cents.
The market remained confined to a relatively narrow 67 to 70 cents range, in which it has now traded for the last eleven sessions. On Wednesday the market made an attempt to reclaim the 70 cents level, inspired by strength in grains and soybeans, but it turned out to be nothing more than a 'sucker rally'.
With corn and soybeans weakening late in the day, cotton did not have enough of its own momentum to take out this important resistance level and it had to relinquish nearly all of its intra-day gains by the end of the session.
Interestingly, despite the market's lackluster performance we continue to see open interest rising, as it set a new record yesterday at 284'427 contracts. Open interest in the March contract, which is now in liquidation mode, amounted to just under 106'000 contracts this morning, which is less then the 110'000 contracts the December '07 contract had open exactly three months ago.
Back then, total open interest amounted to 250'000 contracts. In other words, while there are slightly fewer contracts open in the liquidating spot month, we have now over 34'000 contracts more in total open interest. Broken down by crop years we notice that open interest in current crop has dropped slightly over the last three months, from 221'000 to 210'000 contracts, while we have seen a huge jump in new crop, from 29'000 to 74'000 contracts.
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