Cotton futures began the day under pressure on the screen, as cross commodity weakness looked to take an early toll. After a bearish acreage number on Friday morning, the corn market had not only locked limit down on Friday, but was locked limit down on the screens last night.
This continued weakness was a notable concern, as without having planted, the US farmers can still opt out of corn intentions and into Cotton, however economically unlikely that still must be. The open outcry session opened with Cotton trading around 20 lower initially, however there was quite a lot of early pressure from locals in particular who had bought the opening, and soon the market was trading into waiting spec sell stops beneath the Friday lows as 53.20.
Prices in May ran all the way down to 52.77 before support held things together, mostly in the form of commercial sale fixations. Prices staged something of a rally at this point, which coincided with a 30 cent rally in the Soybean market. The spreads had continued to widen, narrowed in on the rally and then finished weak with the May/July trading out to 150 July premium late in the session.
May spent much of the second half of the session back in positive territory before some late in the day spec selling took prices back lower to finish with active month losses of 12 points in Dec through to 40 points in May. Estimated volume was again substantial at 42,433 lots.
The ICAC produced their world cotton supply and distribution estimates, with little month on month changes. 06/07 estimates include a global production figure of 116 million bales against 120 million bales consumption. For 2007/08 the group estimate the same production with a 123 million bale consumption, which leads to a drawdown of 5 million bales ending stocks from 52 million this season.
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