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Technicians continue to be frustrated with cotton market inability

Apr '07
Since late February, cotton prices have been trapped in a dull two-cent range and unfortunately, the holiday-shortened week brought more of the same. A failed rally attempt on Monday established the entire range for the week and to the downside. The market then spent the remainder of the week at the lower end of the six-week range with relatively small daily ranges.

Even though dip in prices has found substantial commercial buying - based on export demand - not even strong rallies in the grain markets were able to spark an attempt to return to Monday's highs. However, most of the week's volume came from commodity funds rolling their May positions into July and some even into December. This "rolling" of positions will increase this week with the "Goldman" rolls. May cotton lost 66 points for the week while new crop Dec was 57 lower for the period

In other markets, gold had a good week closing $11 per ounce higher while silver added 30 cents. Grains settled a little lower on the week after an extremely volatile period following the Planting Intentions report. As the week ended, Corn was 7-8 cents lower on the week but that was quite an impressive comeback. The two sessions following the report saw corn loose about 20 percent of its value. Soybeans closed slightly lower for the week while wheat gained 7 to 12 cents depending upon the exchange.

Crude oil slipped about $1.60 on the easing of tensions but tell that to the local gas jockey. The Lundberg Survey release this weekend told us what we already knew; that gasoline prices have risen about 18 cents per gallon just the last two weeks.

From a fundamental standpoint, the sideways pattern in the cotton futures market is exacerbated because of the radical changes in the Chinese buying patterns. A Chinese senior official was quoted this last week as saying import quotas will be issued "step by step", in a timely manner in order to preserve 'market stability'.

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