News Flash

Export sales on the low side

14 Sep '07

2 min read

Market traded in a very narrow range as the volume was much lighter today in NY with many floor brokers taking off for the Rosh Hashana holiday. The export sales were also on the low side and after yesterday's rally, the cotton market was not ready to break out higher.

However, we did close on the highs and the stock market had a very firm close as well. Other grains were mixed with wheat and corn down, but soybeans is still trying to go higher. Volume of futures was back to the average of 13,000 and options of only 9,000 contracts.

Spec buying seems to be the main feature in this move as the technical picture is getting stronger, but the fundamentals are showing that these levels will push demand down. Sales this week of just over 100k were down 64% from last week and almost 75% off the 4-week average.

Shipments of 220k were down considerably from last weeks 320k and the 6 week average closer to 400k. Hurricane Humberto hit the Texas coastline yesterday, but has dropped its intensity, but still dropping considerable moisture on the Delta region that is getting ready to harvest.

October futures are coming to a close soon with FND on September 24th, so we will soon be focusing only on the Z'07 which should continue to see good scale up selling from the trade.

Technically, RSI is closing in on 70% which would signal an overbought market, but we closed above the 50 day moving average so technically we are still in an uptrend. However, the market now found more resistance at a previous gap between 62.80 and 63.25 so we will need to close above 63.25 to clear a path to test higher levels.

Obviously new crop grains will be critical to the further upside in this move as the funds continue to buy into scale up trade selling. 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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