Another Open interest record has been reached with 275,922 contracts outstanding.
As trading on Wednesday began prices eroded, never reaching the plus side and before long values dropped further following the lead of outside markets, which were all under pressure. It seems that the “recession” label is on everyone’s lips and that focus removed whatever bullish enthusiasm specs may have had towards cotton. By the time outcry opened the active March contract was already down to 70.60.
A minor improvement occurred as outcry opened, but it wasn’t sufficient to get things going as beans were sharply lower and in response cotton prices dropped as well. March went down to 70.15. March then stabilized bouncing between 7030-45, looking for direction. It found it when beans improved, but also when a coffee trader, the same one who had bought the big size in March 68 puts almost a month back, came in asking for quotes on the same. He re-approached this time selling and crossing volume in that strike, most likely liquidating. March then moved above 7115, triggering stops and causing shorts to cover.
The action was volatile, but with all that has transpired not totally unexpected. Prices did manage to recover most of their losses, closing down only 37 on the day. The stock market recovered and while recession talk will be a fear, it probably won’t hold its focus for very long in cotton as this market seems poised to push upward again.
I think that while buying price breaks may seem difficult, it is a strategy that will likely prove worthwhile. Fundamentally, I’m a bear, but mills have got to be nervous (cotton prices are already 30% higher than this time last year) and demand which has been poor may receive some needed help as foreign buyers are now moving away from the holiday period. Therefore, I look for improved sales, which if it does should lend confidence to bulls and give a renewed excuse to bully prices again.
I like buying almost any month against March. And although March may head to 7400, look for a trading range between 7000 and 7300 for a while.
Si quiere más información, por favor contáctenos,
El equipo de Brokers de Futuros USA
Fuente: MF Global
©2007 Jurgens Bauer & Associates all rights reserved.
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