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Commodity complex keeps sliding lower
10
Sep '08
Cotton continues to break downside support levels as demand remains hand to mouth and the commodity complex keeps sliding lower.

After such a strong run during the first half of the year which peaked at the end of June, new investment has been non existent and profit taking remains the main driver in depressed energy, grain and metal prices.

The U.S. dollar has benefited, but the stock market keeps getting bad financial news even with the big bail out this week of Fannie and Freddie. Volume was above average, but still below 20,000 futures as the open interest remains neutral to unchanged.

We get a sales report tomorrow which should be more positive and show signs of increased sales starting last week. This week is not different as we have been getting good scale down demand for 4th quarter shipments.

However, the general bearish economic sentiment is weighing on the commodity complex and we may be in store for further downside. We still have major storms in the Gulf of Mexico and several more weeks before the crop is made, so we should get a bounce soon.

We broke long term support levels at 65 today and this lead to some spec selling with scale down trade buying. We are getting some good fundamental support, but the technicals have turned negative and this week, we are crossing lower on the MACD.

Considering the low open interest in cotton and the holiday mood from Ramadan, cotton is in a tailspin and will need some good sales or spec support in order to rebound. We continue to test the lows and it is hard to say where the bottom may be, but it feels like it is close. This will depend on outside markets, but a short term bottom may be in place near the 63 cent level?

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