expect cotton to rally

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    Cotton Review: Up Slightly; Traders Spread Contracts

    DOW JONES NEWSWIRES

    Nybot cotton futures closed slightly higher on spread-related trades, with
    little outright business conducted, an analyst said Friday. Most of the volume
    occurred on the December/March switch.

    December cotton rose 3 points to settle at 49.21 cents and March was up 8
    points to 53.35.

    "For the most part this was a typical Friday," with light volume and little
    fresh news available to influence prices, said Jeff Driver, crop marketing
    consultant at Iamhedged.com in Memphis.

    On the options, a few large traders bought July calls, he said.

    Cotton has been battling the row-crop markets for acres, and the row crops
    are winning.

    "Beans are high, corn is high, wheat's following and cotton has to rally at
    some point or nobody's going to plant cotton. You're losing acres in Texas,
    you're losing them in the South - I mean corn's already made new contract highs
    recently," Driver said.

    A key component of the cotton market, exports, have been lethargic and are
    giving traders no incentive to sustain rally attempts.

    "With world supply and demand very near in balance, there appears to be
    little support to move to the upside," professor emeritus at Mississippi State
    University and cotton expert O.A. Cleveland said Friday in his commentary.

    "Too, as certificated stocks continue to build and the export demand for U.S.
    cotton continues very weak, fundamental market considerations suggest a tad bit
    lower prices," he said.

    The market has been stuck recently in the lower end of the trading range, as
    traders roll positions from December to March ahead of the Goldman Roll, which
    begins on Tuesday.

    The market will have fresh crop production and supply/demand data from the
    Agriculture Department on Thursday, followed by first-notice day for December
    futures on Nov. 22.

    Technically, the market finds trendline and psychological resistance intact
    at the key 50.00 cents level. More immediate resistance is pegged at 49.40 and
    49.70. Support on December is uncovered at 48.76, 48.40 and 48.08-07.

    U.S. certificated stocks as of Nov. 2 rose to 784,276 500-pound bales, from
    780,267 bales on Nov. 1, Nybot reported. There were 58,267 bales awaiting
    review.

    Nybot futures volume was estimated at 17,000 contracts, with 5,800 calls and
    1,680 put options traded.

    In other markets, December crude oil on the New York Mercantile Exchange
    rallied $1.26 to $59.14 a barrel. December gold was $1.40 higher at $629.20 an
    ounce.

    The U.S. dollar was strong against the world's major currencies.

    The Reuters/Jefferies Commodity Research Bureau Index was up 2.27 at 309.91.
 
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