Notas del Mercado de Algodón Jurgens Bauer 01/14/08

Futuros USA

Comentario de Algodón

Por: Jurgens Bauer



A Bull Reversal for Cotton as Agricultural Markets Surge,

(Is it time to close your eyes and get long?)

Friday’s crop report didn’t contain anything specific to bull cotton prices, yet cotton values surged as a tsunami of buying carried prices in all contract months limit up. March futures traded to a high of 7050 synthetically on the close (+354, and the largest one day gain in many, many years). Electronic trading on Ice was provoked to the point where an announcement was made that electronic trading would be delayed until Monday’s outcry. However, later it was decided that screen trading would resume on Sunday evening. This does raise some concern in the industry since the demise of outcry is slated for March 1st. Perhaps ICE management will re-address that issue.

Yes, I know I had been plugging owning puts and admittedly it looked appropriate until Friday. But better for those who owned puts than those holding out right shorts, as put owners losses are limited to the premium paid, whereas those outright shorts are not.

The vehement buying and subsequent price move is chilling, but one that ought to garner renewed respect for the amount of money funds are willing and able to throw at cotton. Prices seem to be driven by this flow of money as open interest can attest. There are perhaps even more massive amounts of money that can be directed cotton’s way, so it doesn’t look like this phenomenon is going to stop anytime soon.

The fuel for this flow of funds (and subsequent cotton reversal rally) stems from inflationary fears as well as the competition for acreage argument. Outside markets have been impacting cotton for quite sometime now and I don’t see that changing. And although I had felt strongly that cotton prices were due a correction, it appears as though market forces saw the drop on Wednesday and Thursday more as a buying opportunity than a further threat.

So, where do we go from here?

Friday’s reversal tells quite a story. It tells me that you can throw fundamentals out of the window. It doesn’t seem to matter that exports are dreadful and there is no reason to expect that situation to turn around. The commodity arena is attracting a flow of money never seen before and that flow of money is going to dictate. Asset allocation into commodities will dominate and supersede. Inflation concerns, as the Fed increases the money supply by lowering rates, make commodities an attractive alternative and we may not have seen anything yet. Open interest is at record levels and climbing. Areas that traditionally were cotton growing regions will be secured for foodstuffs and that means in the world not just the US.

Support: 6665, 6610, 6500? 6200?

Resistance: 7035-55 then ?

Si quiere más información, por favor contáctenos,
Maria Aranda
El equipo de Brokers de Futuros USA
Email: [email protected]
TEL: 312-261-7395

Fuente: MF Global

©2007 Jurgens Bauer & Associates all rights reserved.

Jurgens Bauer


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