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After a two-day holiday, cotton futures in China closed slightly lower overnight. However, the declining US dollar, record high gold values, and inflationary fears helped to support July and December ICE cotton futures to higher trade overnight. Yesterday, the market bounced off of the 50-day moving average and off the neckline of a head & shoulders top formation for an impressive recovery from the lows. Ideas that the USDA may be forced to increase the exports and tighten ending stocks in its report on Friday helped to provide some support. The market was under heavy selling pressure into the mid-seesion yesterday day due to talk of slower demand from China after the news of yet another interest rate hike there. However, a firm tone for the US stock market and a move to new all-time highs for gold helped to provide underlying support, and short-covering emerged to help support. December cotton closed sharply higher on the session and managed a move to a new contract high. India’s Farm Minister indicated overnight that his country is considering allowing further exports on top of the 5.5 million bales already approved for the current marketing year, which began on October 1st. The USDA attache in India believes their 2011/12 crop could be a record high 27.2 million bales, but consumption is also expected to push up to 22.6 million bales, and with a record low stocks/usage ratio, exports are likely to be set at around 5.1 million bales next year. The USDA attache in China believes that production there could jump 17% this year to 7.5 million tonnes, but with higher consumption expected (11 million tonnes), China’s imports are pegged at 3.6 million tonnes, up 6% from this season. ICE certified deliverable exchange stocks moved up to 207,747 bales from 205,932 bales the previous day.
TODAY’S GUIDANCE: The International Cotton Advisory Committee indicated this week that world cotton ending stocks for the 2011/12 season will reach 47 million bales, up from 38 million this year. Bullish outside market forces may provide some support today, and potential tightness in India and China for the coming year suggests the importance of a large US crop for world supplies. Uncertain weather for now and a “buy commodities” mentality from investors may keep the short-term trend up. December cotton close-in support moves up to 135.05, with 144.45 as next upside target. July cotton resistance is at 196.66. A close above this level would be considered bullish and would suggest another leg higher to 223.27. Today appears to be critical for old crop cotton.
Cotton: Today Looks Critical for Old Crop Cotton
by Dave Hightower on April 6, 2011
Below is a sample of The Hightower Report’s 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!
After a two-day holiday, cotton futures in China closed slightly lower overnight. However, the declining US dollar, record high gold values, and inflationary fears helped to support July and December ICE cotton futures to higher trade overnight. Yesterday, the market bounced off of the 50-day moving average and off the neckline of a head & shoulders top formation for an impressive recovery from the lows. Ideas that the USDA may be forced to increase the exports and tighten ending stocks in its report on Friday helped to provide some support. The market was under heavy selling pressure into the mid-seesion yesterday day due to talk of slower demand from China after the news of yet another interest rate hike there. However, a firm tone for the US stock market and a move to new all-time highs for gold helped to provide underlying support, and short-covering emerged to help support. December cotton closed sharply higher on the session and managed a move to a new contract high. India’s Farm Minister indicated overnight that his country is considering allowing further exports on top of the 5.5 million bales already approved for the current marketing year, which began on October 1st. The USDA attache in India believes their 2011/12 crop could be a record high 27.2 million bales, but consumption is also expected to push up to 22.6 million bales, and with a record low stocks/usage ratio, exports are likely to be set at around 5.1 million bales next year. The USDA attache in China believes that production there could jump 17% this year to 7.5 million tonnes, but with higher consumption expected (11 million tonnes), China’s imports are pegged at 3.6 million tonnes, up 6% from this season. ICE certified deliverable exchange stocks moved up to 207,747 bales from 205,932 bales the previous day.
TODAY’S GUIDANCE: The International Cotton Advisory Committee indicated this week that world cotton ending stocks for the 2011/12 season will reach 47 million bales, up from 38 million this year. Bullish outside market forces may provide some support today, and potential tightness in India and China for the coming year suggests the importance of a large US crop for world supplies. Uncertain weather for now and a “buy commodities” mentality from investors may keep the short-term trend up. December cotton close-in support moves up to 135.05, with 144.45 as next upside target. July cotton resistance is at 196.66. A close above this level would be considered bullish and would suggest another leg higher to 223.27. Today appears to be critical for old crop cotton.
Tags: Cotton, Softs
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