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Sellers have been scarce since late last week despite the fact that cotton has been in correction mode over that stretch. The lack of selling has been a factor despite weak jobs and housing data in the US and even signs of softening in the manufacturing sector with last week’s regional survey from the Philadelphia Fed. Yesterday’s Existing Home Sales for May were unexpectedly weak, showing a decline in sales for the month. This will be followed by New Home Sales this morning and Cotton Consumption, Export Sales and Initial Jobless Claims tomorrow. Traders are braced for more weak data on housing and jobs, but cotton demand numbers are expected to remain strong. Weather remains hot and mostly dry with only scattered light showers forecast over the next few days, mostly in and around the Delta. The early-planted crop started off with some of the best soil moisture levels in years, but late-planted cotton had more normal soil moisture, and some areas of the Delta and scattered areas of Texas could now use some rain. However, Monday’s Crop Progress report continued to show a high good-to-excellent rating of 62% for the overall crop, unchanged from the previous week. In yesterday’s action, December cotton saw another day with early weakness followed by a modest mid session recovery. Gains were limited and the day’s prices fell inside Monday’s range yesterday, but Monday’s highs were taken out overnight. Stocks registered for delivery against the ICE contract followed Monday’s very sharp drop with a more moderate drop to 529,352 bales from the previous day’s total of 568,792 bales.
TODAY’S GUIDANCE: The correction may be nearing an end in cotton. Demand numbers for cotton remain among the strongest for any agricultural market, and funds have maintained a large net long position in this market for that reason. There is actually room for trend-following funds to increase their net long position after a recent spate of liquidation and this, plus strong export sales, should push the December contract to new highs for the year of 83.50 and possibly 85.00 over the intermediate term. First support in December is at 78.93 to 78.95 and then at 78.00 to 78.24. First resistance is at 79.90 and then at 80.90.
Cotton Market Commentary – 2010.06.23
by Terry Roggensack on June 23, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Sellers have been scarce since late last week despite the fact that cotton has been in correction mode over that stretch. The lack of selling has been a factor despite weak jobs and housing data in the US and even signs of softening in the manufacturing sector with last week’s regional survey from the Philadelphia Fed. Yesterday’s Existing Home Sales for May were unexpectedly weak, showing a decline in sales for the month. This will be followed by New Home Sales this morning and Cotton Consumption, Export Sales and Initial Jobless Claims tomorrow. Traders are braced for more weak data on housing and jobs, but cotton demand numbers are expected to remain strong. Weather remains hot and mostly dry with only scattered light showers forecast over the next few days, mostly in and around the Delta. The early-planted crop started off with some of the best soil moisture levels in years, but late-planted cotton had more normal soil moisture, and some areas of the Delta and scattered areas of Texas could now use some rain. However, Monday’s Crop Progress report continued to show a high good-to-excellent rating of 62% for the overall crop, unchanged from the previous week. In yesterday’s action, December cotton saw another day with early weakness followed by a modest mid session recovery. Gains were limited and the day’s prices fell inside Monday’s range yesterday, but Monday’s highs were taken out overnight. Stocks registered for delivery against the ICE contract followed Monday’s very sharp drop with a more moderate drop to 529,352 bales from the previous day’s total of 568,792 bales.
TODAY’S GUIDANCE: The correction may be nearing an end in cotton. Demand numbers for cotton remain among the strongest for any agricultural market, and funds have maintained a large net long position in this market for that reason. There is actually room for trend-following funds to increase their net long position after a recent spate of liquidation and this, plus strong export sales, should push the December contract to new highs for the year of 83.50 and possibly 85.00 over the intermediate term. First support in December is at 78.93 to 78.95 and then at 78.00 to 78.24. First resistance is at 79.90 and then at 80.90.
Tags: Cotton, Softs
About Terry Roggensack