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The market acted like a near-term low had been put in place early Monday with its spike down and than higher close, but selling emerged overnight to drive prices to their lowest level since February 25th. Futures in China were down 0.5% overnight, and this may have added to the negative tone, but there has not appeared to be one factor or news item driving the market down. Perhaps we are seeing a continuation of the recent long liquidation trend and there is a lack of new buying interest from commercial traders. The COT report showed large and small speculators held a net long position of 46,340 contracts as of April 12th. With a short-term downtrend, long liquidation selling could get active if support is violated. July cotton fell sharply early in the session yesterday, only to close slightly higher on the day and up 500 points from the lows. The recovery was impressive as the market initially reacted down to the sharp losses in China, news of tightening measures there over the weekend and the S&P downgrade of the US. The market followed other agricultural markets lower early, but a recovery in grains and other commodities despite bearish outside market forces lent support to cotton. The weekly Crop Progress report, released late yesterday, showed that 9% of the US cotton crop has been planted compared to 7% last week and 10% a year ago. The 10 year average for this time of year is 11%. Texas is 12% planted, compared a 10-year average of 16%. The key growing areas in Texas may see some scattered rains later this week, but conditions remain too dry for planting in non-irrigated areas.
TODAY’S GUIDANCE: Open interest is on a slight decline and speculators still hold a hefty net long position, so the path of least resistance is still down. July cotton reached its initial downside objective of 173.20 before the bounce late yesterday, but it took out yesterday’s lows in the overnight session. This leaves 164.55 as next objective and then 147.88 as a longer-term downside target off of the head and shoulders top. Close-in resistance comes in at 176.95 and 178.35. December support is at 125.10.
Cotton: Declining Open Interest and Heafty Net Long by Speculators
by Terry Roggensack on April 19, 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!
The market acted like a near-term low had been put in place early Monday with its spike down and than higher close, but selling emerged overnight to drive prices to their lowest level since February 25th. Futures in China were down 0.5% overnight, and this may have added to the negative tone, but there has not appeared to be one factor or news item driving the market down. Perhaps we are seeing a continuation of the recent long liquidation trend and there is a lack of new buying interest from commercial traders. The COT report showed large and small speculators held a net long position of 46,340 contracts as of April 12th. With a short-term downtrend, long liquidation selling could get active if support is violated. July cotton fell sharply early in the session yesterday, only to close slightly higher on the day and up 500 points from the lows. The recovery was impressive as the market initially reacted down to the sharp losses in China, news of tightening measures there over the weekend and the S&P downgrade of the US. The market followed other agricultural markets lower early, but a recovery in grains and other commodities despite bearish outside market forces lent support to cotton. The weekly Crop Progress report, released late yesterday, showed that 9% of the US cotton crop has been planted compared to 7% last week and 10% a year ago. The 10 year average for this time of year is 11%. Texas is 12% planted, compared a 10-year average of 16%. The key growing areas in Texas may see some scattered rains later this week, but conditions remain too dry for planting in non-irrigated areas.
TODAY’S GUIDANCE: Open interest is on a slight decline and speculators still hold a hefty net long position, so the path of least resistance is still down. July cotton reached its initial downside objective of 173.20 before the bounce late yesterday, but it took out yesterday’s lows in the overnight session. This leaves 164.55 as next objective and then 147.88 as a longer-term downside target off of the head and shoulders top. Close-in resistance comes in at 176.95 and 178.35. December support is at 125.10.
Tags: Cotton, Softs
About Terry Roggensack