Market traded higher electronically overnight which fed off the strong close on Friday. The open outcry found some follow through spec buying but ran into bearish trade options which eventually broke the rally and sent the market to test the daily lows near 65.00 cents down over 80 pts.
Cotton did manage a comeback to close higher, but found little support from the stock market or the grains. Volume was above average at 27,000 futures and 26,000 options as cotton found good support under 65.50 but also strong trade selling over the market near 66.50.
Good moisture arrived in the Delta Southeast over the weekend as the crop index improved slightly this week and we get closer to harvest. The spec hedge report tomorrow should show a longer position as the commitment of traders on Friday showed the funds increasing their longs and decreasing shorts almost 3% longer.
Today was first notice day for V'07 as the notices issued were just over 200 with JP Morgan delivering and Term commodities stopping the majority. Open interest is now over 221,000 contracts and cert stocks close to 500k with 30,000 awaiting review.
Based on stability in the equity and commodity markets, there is a good chance that cotton has further upside. Technically we are forming a top near today's close as this area is finding plenty of trade scale up selling, but near 65.00 has become a new support line. The close today, was positive and RSI is still holding at 70 while it went as high as 86 on the last rally.
Every way you look at the cotton market, we have room to the upside compared to the limits set on the last rally. A strong commodity index and weak dollar keep the short term friendly for cotton.
-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)")
