Globecot On The Market
11 December 2009 22:44 GMT
The US is becoming a bit more competitive; however, it is still not the growth of choice for buyers in the Far East. There was some light business done last night into Indonesia and Taiwan, but once again, nothing in volume. Despite the recent lack of sales though, merchants are becoming more and more bullish. One merchant stated this morning inquiry and chatter were increasing, and several merchants seem to believe that if there is a price dip, mills will come rushing to the table.
Funds maintain the bullish story line, but they are much less active. Whether it’s because they are waiting for price to move beyond its recent range, or they are taking money off the table prior to the year end, the CFTC shows hedge funds as adding only 518 contracts to their net long position now at 43,556. Index funds were sellers for the week ending December 8, decreasing their net long position by 1,516 contracts to 79,691.
After first walking into the door this morning, the market was stronger; but after retail sales were released, the dollar strengthened and cotton weakened. Retail sales were up 1.3% for the month of November, which was higher than the estimated 0.7%. When one discounts automobiles, gasoline and building materials, core retail sales rose by 0.6%. A further breakdown of the retail sales components shows a 0.7% decline in clothing and accessories. Overall though, the equity markets viewed retail sales as a positive number; and in a change from recent trading behavior, stocks rose as did the dollar. The Dow managed to close at 10,471, up about 65 points. The Dollar Index gained 0.54, to close at 76.585, or up about 0.71%.
Given the dollar’s strength, it was actually remarkable that cotton managed to post a close in the green, much less be up 59 points on the day. Volume continues to be very light with less than 9,000 contracts trading, and of those, 58% were related to spread activity.
After the ACSA announcement regarding the expected release of import quotas, the Chinese markets have been generally weaker. This morning, though, prices stabilized. The ZCE futures rallied, but ended up settling about 100 yuan/ton lower than the highs of the day. The most active contract, May, finished 40 yuan/ton higher at 15,805. Session volume for all contracts was 311,870 contracts. Open interest increased 15,428 contracts to 245,096. The CNCE forward market saw its most active contract, March, close 44 yuan/ton higher at 15,530. Session volume totaled 8,680 tons and open interest now stands at 91,600. Import prices fell .40-1.00 cents/lb. The reserve auction offered and sold 20,096 metric tons of cotton at an average T328 price of 15,068 yuan/ton. In this latest round of reserve auction, there have been a total of 299,065 metric tons. According to China Customs, cotton imports reached 112,900 metric tons in November, down 5,700 tons (5.1%) from October. In other news, China's industrial production grew by 19.2%, which was more than the estimated 18.2%.
We won’t rule out that a dip may occur, but sentiment is increasingly bullish from the trade and the speculators. With the holidays approaching, the cotton trade may well continue to have light volume and remain sideways until after the New Year.
Technical Commentary
It was in an inside day, so although the close was indeed higher, the trading action remains well entrenched in a consolidation pattern. We continue to find support at 73.06, 72.80, 71.73 (lower Bollinger Band), and 70.99. We continue to find resistance at 75.09, 75.74, and 75.85 (upper Bollinger Band).
By Candice Graham
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment