ECOM daily cotton markets recap - 26th June, 2007

27 Jun '07

2 min read

Another quiet session as N'07 is almost extinct with just over 300 contracts open after over 100K open in N'07only 2 weeks ago. 103 more notices were issued today and stopped as the cert stock continues to trade hands. The overall size of cert stock remains steady with 704k and 10,000 awaiting review.

The market was trading lower electronically but found good local buying after open outcry began along with friendly option buying by trade that helped push the market to the session high of 61.70. This eventually came back down and traded in a narrow range the balance of the day. Volume was light again with only 11,000 futures and 6,000 options.

Today's spec hedge report was in line with expectations as the specs added to their long position with a net long now of 55,112 contracts. The big change was a decrease in the shorts which allowed them to raise their percentage from 23.1% to 27.1%.

We will continue to watch this position closely as you can see with the charts attached in PDF, they are reaching a very large quantity of contracts long considering the size of open interest. We are currently looking at the largest percentage of spec open interest since early 2006 which only represented a net long of 25,000 contracts.

Technically, the market feels overbought at 70 RSI and may want to take some profits. But many are happy to trade sideways and wait for any possible surprises with the acreage report on Friday. Most estimates currently are only slightly lower to unchanged.

There seems to be good support in Z'07 near 60 cents and we will probably continue to trade sideways between 60/62 as the specs push for the top and the trade are scale down buyers. Demand is quiet and will probably need a pull back in NY before new business can be done in volume.

Click here to view graphical presentation:

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