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Crude oil prices might get nervous this week
Jul '08
Cotton started last week with a nose dive on Monday, posting the second lowest close since before Christmas but on the lowest volume in eleven months. Even though the spec/hedge report Monday was skewed by incorrect data from a week earlier, it did show clearly that specs were going short and hedgers liquidating longs. It certainly looked like the bears had the upper hand.

But cotton futures surprised and confounded traders Tuesday by posting solid triple digit gains despite weak outside markets and no particular news event. However, the bulls had no more success as the market failed to follow-through to the upside as well. The ranges for the balance of the week were pretty well confined within Tuesdays range.

Last weeks excellent export sales report is a reflection of the demand that rests in the 7200 area. However, rallies run out of gas at 7400 very possibly due to the influence of pronounced weakness in outside markets. The CRB Index fell a stunning 3,400 points lead by crude oils biggest weekly break in history and a collapse of grain prices. December cotton however, lost only 35 points for the week.

Next week crude oil prices might get nervous over Tropical Storm Dolly but the Texas RGV, where cotton harvest is just getting underway, is also in Dolly's path. However, without a doubt, the number one potential fundamental situation is in India. The monsoon's development or lack thereof over the next two to three weeks could be a powder keg and force major changes in the supply demand balance.

The 20 day stochastics gave a buy signal this past week but the best the market could do was to hold its own. The bulls need a decisive move and close above 7533 to build a technical case for a move towards the 7900 to 8000 cents area. Conversely, a break below 7086 followed by a close below 7176 would open the door for a break back towards 6700.

The Ag Market Network's monthly conference call will originate from New York City this Friday, July 25th at 7:30 am central time. The panel this month will be joined by Joe Nicosia, CEO of Allenberg and president of the American Cotton Shippers Association. Listeners can hear the broadcast either live or as a replay several hours later on the internet at agmarketnetwork.net

Swiss Financial Services

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