We had a down day across the board in commodities as oil made an early rally but fell hard toward the end of the day. Oil has been trading in a sideways trade channel between 130/140, but the MACD crossed lower today and may weigh on the market going forward.
The grains also took a big hit today but closed off the lows. Cotton also closed off the lows, but did take quite a hit lower which may open up for some more downside testing. Volume was below average with 20,000 futures and 14,000 options as open interest in N'08 fell to 15,000 contracts this morning with 3 trading days left.
Export sales were very negative today with several cancellations equating to only 43,000 new sales while shipments stayed strong at 300k. We knew the inquiries had slowed down, but it was surprising to see a marketing year low after two good weeks back to back.
This just reinforces the fact that business at these levels will not exist and if we are not going to get the technical follow through that we did in the first quarter, the fundamentals will eventually kick back in and the market will have to trade lower.
Technically, the market still looks friendly, but we are getting a bit overbought as we may have put in a high for the short term. The 9- day MA is getting ready to cross the 50 day moving average so this may set up for more underlying support. We are getting some rain in West Texas and if anything the cooler temps this week are helping the 20% of poor and very poor cotton in the dry land areas of Texas.
Cotton will continue to follow the other commodities prices as the dollar and equity markets struggle. Market is finding good resistance at these levels and will have to wait and see if it can break through or we eventually go lower.
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.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.")
