Cotton market bounces slightly

19 Feb '09

2 min read

Cotton bounced slightly today from light short covering and a firm day in the equity market. We are very close to the heavy technical support line in the DJI at 7500 where the market has managed to close above since 1997.

If we can hold it and make some type of rally from this area, there may be some follow through higher in cotton as well as other commodities which are near the lows of the range. H'09 expiration is coming up soon and open interest has fallen to very low levels. Volume was below average with only 11,000 futures and 7,000 options.

Demand has been good recently and the delayed export sales report coming out Friday should reflect that. This may lead to some short term support on the uptrend line that we are currently hitting as seen on page 2 in attached PDF. However, we are not seeing the volume of buying to sustain grains or any other commodity for that matter.

The USD tested the high set back in November last year and is looking like it may break through this time. There is a good chance the stock market may also fail to hold and if that happens the low 40's for the K'09 will be the next level of support.

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