Market drifted in a wider than normal range with the K'07 contract trading between 53.60 and 54.30. There seemed to be support and pressure at either side of the range as we traded a descent volume estimated at over 12,000 contracts.
The 50 day moving average was broken at 54.21, but we could not close above it as some late fund selling pushed the market lower. Options activity was bearish in the morning with put buying and some call selling that initially sent the market lower.
Market seems to be looking for some fresh news and the specs may have added to their long position a bit more as of tomorrow which was almost 5% last week and could be approaching 10%.
The trade continue to be good sellers when the market reaches near 55 cents and will probably continue to see that as the 1100 pts spread seems to be a cap on the market as 1.9 million bales were redeemed from the loan last week.
Currently we are showing 11.5 million bales in the loan left to redeem and almost 600,000 of cert stock with another 50,000 awaiting review.
The USDA prospective planting report coming out on March 30th is the next bit of potential support as numbers are coming in under the NCC report of 13.2 with estimates as low as 12.8 million acres from 15.2 last season. If this number comes out, it might look friendly in the short term, but we are starting out with good pre-crop moisture compared to last years disaster in South Texas.
Also, with better seed varieties, lower abandonment and good weather, we may end up with the same size crop as last year even with a big cut in acres. Still quite a bit of time between now and then, but China will need to come in strong very soon or we may have another test of the low 50's.
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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.")
