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The December contract pushed below last week’s lows overnight to its lowest level since March 3rd. While the new lows were minor, today’s day session may bring a test of whether investors are poised to continue selling. The Commitments of Traders report on Friday showed that trend-following funds continued to be net sellers as they gradually whittle down what had been one of the larger net long positions in any agricultural market. This comes as the USDA’s Crop Progress report showed continued improvement in the overall condition of the cotton crop through this past Sunday. The overall good-to-excellent rating rose to 67% on yesterday’s report. This is up 2% from the previous week and up 5% from two weeks ago. The 10-year average good-to-excellent rating is 53%. Squaring is at 79%, and 26% of the crop is setting bolls. Hot and humid weather and rains on the periphery of tropical storms have left the crop well watered from the Texas Panhandle through the Southeast with the exception of some scattered moisture deficits in central Texas, northern Mississippi and Alabama, and in parts of the Carolinas. Texas stands at 71% good-to-excellent. Drier conditions are expected today and tomorrow with the exception of some scattered light showers in parts of the Delta and points east. Forecasts call for hotter temperatures as the week wears on with the possibility of well above normal temps in Texas and the Delta starting next week. Economic numbers out this week include the US Trade Balance today, Retail Sales tomorrow, and some manufacturing data on Thursday along with the regular weekly Export Sales and Jobless Claims reports. Recent data have pointed to slowing on many fronts and this is raising concerns about the pace of consumer demand in the US through the end of the year. Stocks registered for delivery against the ICE contract fell again yesterday to 217,358 bales from the previous day’s total of 229,859 bales.
TODAY’S GUIDANCE: The overnight erosion suggests that the downtrend is resuming based on an improving crop outlook in the US and potentially sluggish consumer demand. However, it remains to be seen if there are enough sellers in the market at this level to generate sustained losses over the short term. It may take stepped up hedging pressure to fuel the downtrend and to spark further selling by investors, and both of these segments of the market could back off from selling if the market turns higher based on outside indicators. Increased export sales this week could also shift sentiment to the positive side, although the past two weeks’ totals were already above the average needed each week to reach the USDA’s export projection for 2010/11. First support is near 73.00 in the December contract. First resistance is at 74.09 and then at 75.25 to 75.27.
Cotton Market Commentary – 2010.07.13
by Research on July 13, 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!
The December contract pushed below last week’s lows overnight to its lowest level since March 3rd. While the new lows were minor, today’s day session may bring a test of whether investors are poised to continue selling. The Commitments of Traders report on Friday showed that trend-following funds continued to be net sellers as they gradually whittle down what had been one of the larger net long positions in any agricultural market. This comes as the USDA’s Crop Progress report showed continued improvement in the overall condition of the cotton crop through this past Sunday. The overall good-to-excellent rating rose to 67% on yesterday’s report. This is up 2% from the previous week and up 5% from two weeks ago. The 10-year average good-to-excellent rating is 53%. Squaring is at 79%, and 26% of the crop is setting bolls. Hot and humid weather and rains on the periphery of tropical storms have left the crop well watered from the Texas Panhandle through the Southeast with the exception of some scattered moisture deficits in central Texas, northern Mississippi and Alabama, and in parts of the Carolinas. Texas stands at 71% good-to-excellent. Drier conditions are expected today and tomorrow with the exception of some scattered light showers in parts of the Delta and points east. Forecasts call for hotter temperatures as the week wears on with the possibility of well above normal temps in Texas and the Delta starting next week. Economic numbers out this week include the US Trade Balance today, Retail Sales tomorrow, and some manufacturing data on Thursday along with the regular weekly Export Sales and Jobless Claims reports. Recent data have pointed to slowing on many fronts and this is raising concerns about the pace of consumer demand in the US through the end of the year. Stocks registered for delivery against the ICE contract fell again yesterday to 217,358 bales from the previous day’s total of 229,859 bales.
TODAY’S GUIDANCE: The overnight erosion suggests that the downtrend is resuming based on an improving crop outlook in the US and potentially sluggish consumer demand. However, it remains to be seen if there are enough sellers in the market at this level to generate sustained losses over the short term. It may take stepped up hedging pressure to fuel the downtrend and to spark further selling by investors, and both of these segments of the market could back off from selling if the market turns higher based on outside indicators. Increased export sales this week could also shift sentiment to the positive side, although the past two weeks’ totals were already above the average needed each week to reach the USDA’s export projection for 2010/11. First support is near 73.00 in the December contract. First resistance is at 74.09 and then at 75.25 to 75.27.
Tags: Cotton, Softs
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