News Flash

Tight scenario in cotton belt

21 Sep '07

2 min read

Market was slightly lower overnight as we retested the lows which have been holding up since Monday. 63.30 has been proving a very tough level to break, but on the upside there has been very little luck breaking the 65.00 level and we have been unable to close up it on this move as well.

So for the short term, it looks like we will try to break these two limits of the current range as we determine if the fund buying or scale up trade selling is stronger. Volume was back to normal today with 23,000 futures and 17,000 options with the market following firmer grain prices and closing near the highs.

Export sales were weak but better than last week. Sales of 198k and shipment totaling 257k, gave the market some hope, but in the end grains and the cheap dollar as well as a bounce from the correction on Wednesday were the main factors that lead to the rebound in cotton today.

There are some problem areas across the cotton belt, but new crop is getting closer and we will know soon if we are closer to 18mb's or 17 mb's. The stock market struggled much of the day on some further concern about the housing market, but did only close slightly off the highs near 13,800.

Technically, RSI was signaling a correction and it may have started, but in the short term we are trading sideways between 63/65. Trade scale up selling was very strong on the highs today as more cotton can be bought at these levels and higher.

New sales at these levels are very difficult so its hard to see much more upside as so many markets are trading at the highs. Even though the stock market was weak today, grains we firm. Technically we need to get through the downside support from this week at 63.30 and then we may be able to test the 62.80 and 61.00 levels of support.

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