Cotton Market Commentary – 2010.03.10

Posted on10 March 2010. Tags: Cotton, SoftsBelow is a sample of our 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 went into a holding pattern overnight ahead of the USDA’s March supply and demand report, after dropping sharply in pre-report action yesterday. Overnight action consisted of a small bounce that flew in the face of a higher dollar. Some traders are looking for another adjustment upward in US cotton exports today with a commensurate drop in ending stocks, but the slowdown in export sales last week may have reduced the likelihood that another significant adjustment will be made on the March report. Open interest continues to climb with the total up over 23,000 contracts in cotton since mid February as of March 9th.

Economic news and sentiment remains on the positive side with China’s announcement that their exports have risen to the highest levels in about three years. This continues the idea that China and much of Asia are in full recovery mode, and some analysts are even expecting an increase in jobs in the US during the month of March. In addition, the EU and Greece appear to be working out the Greek debt crisis. This still leaves a lot of question marks about the EU and about consumer demand in the US, although the S&P has risen back to near its January highs. Investors were sellers yesterday following nearly a week of successively lower highs in the May contract. Traders said that the push below the previous day’s lows generated a wave of selling by commission houses that helped to accelerate the losses as the day session progressed. The United States Trade Representative Ron Kirk said on Tuesday that he hopes the US can negotiate a settlement of the ongoing trade dispute with Brazil over US cotton subsidies. He noted that otherwise this would require negotiations with Congress on program changes in cotton. Deliveries against the March contract as of March 10th were 228 contracts, taking the total for the delivery period to-date to 4,118 contracts. Stocks registered for delivery against the ICE No. 2 cotton contract kept on rising yesterday, hitting 651,055 running bales versus the previous total of 630,905 running bales.


TODAY’S GUIDANCE: The cotton market relieved much of its pent-up selling pressure yesterday, but there is likely to be further selling over the short term barring a bullish surprise on today’s reports or a sharp drop in the dollar. Continue to look for a decline to near 79.00 in the May contract and possibly as low as 77.83. First support is just above 79.70 in the May contract with next support at 80.00 and then at 77.83. First resistance is at 81.82.

Source:
http://thehightowerreport.com/2010/03/10/cotton-market-commentary-2010-03-10/