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Hard to really say much about May cotton contract

Mar '07
Electronic futures started out the day up slightly, before progressing to around 30 higher on the pre-opening amidst a light commercial bid. The open outcry call was nonetheless 30 higher and prices quickly ratcheted up on the re-opening where it immediately met US merchant selling basis May at 53.60++ This selling was enough to discourage any outlandish buying and soon enough the market fell into another very narrow trading range for the rest of the session.

The market appears to be trying to create an agreement on the new crop acres, or at least what the USDA present as their estimates. We have heard numbers as wide as 11.8 to 13.0, so there is a good spread on the USDA figure. The remainder of the session was quite tight, with little movement in the May / July spread, though if anything there was a firm edge to the May relatively.

Options activity was fairly light, with nobody looking to position too heavily this close to the USDA planted acres report. Prices settled the session with active month gains of 17-21 points. Estimated volume was decent at 16,942 lots.

This morning's spec hedge was not really a surprise with the specs slightly reducing their long positions amidst a general bourgeoning of open interest. Both spec longs and spec shorts increased nearly 3,000 lots, and the overall position dropped from 5.4% to 5.1%. The net spec position is now 11,194 lots.

It's hard to really say much about the May contract, aside from the fact that it really doesn't appear to be going anywhere in a hurry. The last 5 sessions have more or less all taken place within a 75 point trading range, and today's just managed to extend the high side of this.

Moving averages are flattening out, though the short term averages are showing a little weakness, with the 9 EMA beneath the 50 day. Momentum is expectedly neutral, with the RSI at 47.83.

Click here to view graphical presentation:


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