Exciting is not the word for cotton futures. While the market continues to enjoy excellent volume, this past week was yet another roller coaster ride with the beginning and the end essentially being at the same point.
Yet, one suspects that the market direction is very clear; nothing more than a repeat of the past few weeks, back and forth and up and down.
However, the overriding trend continues to suggest a bit more to the downside. Yet, whatever the market low, if it is yet in front of us, most likely we will see it this month - November.
With world supply and demand very near in balance, there appears to be little support to move to the upside. Too, as certificated stocks continue to build and the export demand for U.S. cotton continues very weak, fundamental market considerations suggest a tad bit lower prices.
While December and March futures prices down to 42 cents are offered as a possibility, the 45-46 cent level should offer significant support.
However, I am reminded that I previously though that the 51-52 cent level in December was near impenetrable. The December contract is nearing its first notice day and subsequent termination.
Thus, we are seeing the market dominated by spread trading. The current spreading activity suggests, as commented last week, that the market is poised for March futures to fall to the level of December futures once December goes expiry.
Too, should U.S. export sales remain as anemic as has been experienced over the past month, then March futures, once it becomes the lead month, will have a significant challenge to hold the 45-46 cent level.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
