Cotton futures moved lower on the week as the speculative funds appear bound and determined to take December to its 46 cent technical support level. If they are successful in that endeavor, they will then attempt to press the market down to the 41-42 cent level.
Don't bet against their chances of looking 46 cents in the eye. However, a five cent or so rally is forthcoming, it is just another six weeks away-give or take two weeks.
The lack of U.S. export business, coupled with the heavy burden of certificated stocks, continues to keep a firm strangle hold on the market.
With certificated stocks just shy of three quarters of a million bales and weekly export sales anemic at the 140,000 to 175,000 bale range, this market longs to move forward into the New Year.
Fast forwarding to calendar year 2007 will bring with it active buying from Chinese mills, an expected drawdown in certificated stocks, and a step closer to reduced plantings in the U.S. as well as in most other countries.
Yet, for now the market is stuck in the midst of the 2006 Northern Hemisphere harvest as well the unprecedented level of aging certificated stocks.
With the expiry of the December futures contract it is expected that a significant level of the current certificated stocks will not be recertificated due to the large penalty (discount) that they would carry.
Actually a portion those, just over 103,000 bales, were decertificated this weekand were thought to have been sold to Turkey.
-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)")
