Notas del Mercado de Algodón Jurgens Bauer 01/24/08

Futuros USA

Limit Down and then some


After the smooth and orderly increase cotton prices experienced during the month of December, January and the New Year has wrought nothing but havoc. Cotton prices plummeted Wednesday and went out offered at the limit. In options, where there is no limit, March traded synthetically at 6630, 6640 and last 6650 on the close. But it was only after the close that stocks rallied and what a rally they had. The Dow which had been down 300, closed up 300, a reversal of 600 points!


All I can tell you is that the Grains crashed and cotton went with them.


The fear is that longs, (and funds are long in record amounts), will continue to liquidate. They may, and why not, even if it’s to step aside and re-evaluate. Others may seek to realize profitable positions that can be taken, while others may liquidate to shore up positions elsewhere. There are numerous reasons to expect more selling as it feeds on itself in situations like this.


On the other hand, as cotton followed the stock market down, can it catch up to the bounce experienced after the close?


As I have said repeatedly, I am not bullish on March, but I can build a strong fundamental argument for wanting to be long the back because cotton plantings are going to be really low. Why plant cotton if you can plant something else that requires less attention and costs less money?


Anyway, the export report normally scheduled for Thursday will be issued Friday. Yes, business certainly got done with bids getting hit as buyers had been looking to buy a pull back, but those numbers will not be included in Friday’s report. Besides a bunch of bids probably got canceled as buyers might think more weakness s to come.


Interestingly, while technically the market looks really bad and vulnerable, and with funds holding record longs that they may wish to cash in, prices also are at a level that makes a case for a long term bottom. Crazy as that may seem, I’ve been around a long time and I’ve seen some wild stuff in those 25+ years. If the equity markets stabilize and continue to recover, (the key will be the grains), it’s possible that cotton prices could rebound.


66.66 (nice number) is the next downside target, although March did reach that level synthetically. Otherwise a close above Tuesday’s gap crossing at 70.38
is needed to signal that a short-term low has been made. I still hate March and feel it should be a sale against any other month.


Si quiere más información, por favor contáctenos,
Maria Aranda
El equipo de Brokers de Futuros USA
Email: mararanda@mfglobal.com
TEL: 312-261-7395

Fuente: MF Global

©2007 Jurgens Bauer & Associates all rights reserved.

Jurgens Bauer

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