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Cotton trading in comfortable short term sideways range
Jul '08
The sell off in commodities continues Thursday. Grains saw weakness overnight amid bearish influences. The weather news Wednesday favorable to soybean prices didn't sustain, and the mediocre weekly sales report as well as the anticipated decreasing short term demand drove market sharply lower.

Crude oil settled at $129.29 per barrel, which marked $16 or 11% price drop in 3 days. Influenced by the overall commodity complex, the big drop in cotton came just before noon to touch beneath the 72 cents mark. As grains remained at their lows, cotton recouped part of the loss in the afternoon session to settle at only 72 points lower.

Today's US export report was up to anticipation but seemed to have little impact on the market movement upon its release in the morning. New sales were well improved from the week before as sales were booked when NYF was trading below 72 cents basis Z'08.

Total upland net sales were 56,800 running bales for the current marketing year and 282,700 bales for the 08/09 marketing year. Shipments were lower than last week at 258,600 bales. China was the largest destination with 110,800 bales leaving for the week.

Seasonal total shipments are now close to 12.30 million bales upland and pima combined. With 3 more weeks to go, it looks like we'll fall short of the USDA target of 13.90 million bales by end of this marketing year.

The commodity index started its rally since beginning of June and topped out a month later. This week's loss in the overall commodity market has brought the index down to around the support level established in March. Cotton, at the moment and after having lost nearly 10 cents since end of June, seems to have found a comfortable short term sideways trading range.

The 2,500 contracts of December contract 95 strike call buying from yesterday turned out to be liquidation of the existing positions. December contract tested yet again the trend line resistance level of 74.20 today but failed to go though. Around 72 cents to the down side also proves to have good support.

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