News Flash

Cotton S&D comes in within expectations

13 Sep '07

2 min read

Market traded electronically in between 60.80 and 61.80 and after the open it tested the low side again on light volume. But we managed to work higher and get through the resistance at 62.00 on good fund and local buying into scale up trade selling.

This morning's S&D report was neutral to bearish, but the grains were friendly and after a higher close overnight, soybeans and corn were strong and helped carry cotton higher. However, wheat did close limit down after setting a new record high over 9.00 $/bu overnight. Volume was better than average at 32,000 contracts and 23,000 options as the market broke out of the range to close at five week highs.

The cotton S&D came in within expectations, but with little change to ending stocks, the market was pushed higher by friendly grains. There were good increases in production but most were offset by lower beginning stocks and there is a full breakdown of all the changes show in attached PDF.

Export sales are expected to be lower tomorrow as we have had our first full week at these high market prices. The stock market was unchanged most of the day and remains vulnerable as we get closer to the FED announcement on cutting the discount rate next week.

Technically, RSI is above 60%, but we closed above the 50 day moving average and broke the recent resistance at 62.00. However, the market now found more resistance at a previous gap between 62.80 and 63.25. After getting through this area, we may see some buy stops and fund buying that could carry us to the double top at 65.00 made on the last correction.

Obviously new crop grains remain strong with wheat possibly putting in a short term high today. There are still several weeks remaining for the Northern Hem crop which will be very critical, but the short term trend remains friendly.

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