Market Comments – October 10, 2019

From a technical perspective the market has performed quite well over the last three weeks, showing an ability to bounce back from weakness and forming a ‘rounding bottom’ in the process, which is often a sign of further strength to come. However, as soon as the market reaches above 6200 there seems to be strong resistance from scale-up trade selling.

Market Comments – October 3, 2019

The market just experienced its second technically induced short-covering rally by the specs, which ran into heavy trade selling once values moved above 62 cents. Support and resistance levels exist because the market has ‘memory’. Commercials who have missed their chance to place short hedges near 63 cents will likely become more aggressive the next time around, which should solidify resistance.

Market Comments – August 29, 2019

Despite the market’s wild gyrations we haven’t gone anywhere, as December has now closed the last four Thursdays within a 68-point range, between 58.94 and 59.62 cents. This is not likely to change anytime soon, as the US loan continues to provide support at around 57 cents, while a move to the upside would have to overcome massive grower selling.

Market Comments – July 25, 2019

It looks like the market has made at least a temporary bottom last week, when it posted back-to-back lows of 61.66 and 61.67 cents and then bounced. However, while some light short-covering and call options buying has given the market a lift, we need to see greater buy-side liquidity in order to generate some lasting upside momentum.

Market Comments – July 4, 2019

Since speculators seem to be losing their power to force the market any lower and with growers not willing to chase values below 65 cents at this point in time, it could set the stage for some short-covering rallies. However, the trade is extremely under-hedged at just 2.34 million bales net and it would therefore take a tremendous amount of buying power to push the market through all the scale-up trade resistance.

Market Comments – June 27, 2019

By and large the market is still stuck in a 400-point trading range, as growers are unwilling to sell the market below 6500, but are waiting for rallies towards 70 cents to do so. Speculators are still holding a sizeable net short position, but the loss of downside momentum and/or one of the potential triggers mentioned above could spark some spec short-covering and new buying.

Market Comments – June 20, 2019

A few months ago there was probably no one in the cotton trade that expected to see a 62-handle in July. We certainly didn’t! But an escalating trade war between the US and China, an increasingly bearish cotton balance sheet and speculators selling 16.3 million bales net since last June have forced the cotton market to its knees.

Market Comments – June 6, 2019

The trade needs to increase its net short in the futures market by a substantial margin, but that requires speculators to go net long again. However, with the chart still in bearish territory and with Trump fighting trade wars on several fronts, speculators seem to be in no hurry to reverse their position.