​​​​​​​Market Comments – August 3, 2017

The market advanced on some spec short covering this week and may eventually test major resistance at 7200 over the coming days or weeks. However, from a fundamental point of view there is no reason for traders to chase prices higher, since the crops are still holding on to their potential. Many producers are waiting for a chance to hedge their output in the 70s and there are plenty of scale-up sell orders already in place.

Market Comments – July 6, 2017

We feel that the onslaught of spec selling is over for now and that the trade isn’t going to sell the market in the mid-60s either. There are simply too many early commitments on the books and with the crop being drawn out and slightly behind schedule we don’t expect any supply pressure until early 2018.

Market Comments – June 22, 2017

After a parabolic move to the upside last month, we now have a similar situation to the downside. Given the still sizeable spec net long position in December this selling pressure could persist as long as speculators feel a need to get out of the cotton market. We have seen similar moves in other soft commodities recently, be it sugar, coffee or cocoa. 

Market Comments – June 1, 2017

The rapidly declining open interest in July is sucking the energy for a big move out of the market, and we haven’t even reached the major index roll yet. With July now near its cash value, we expect it to trade in a fairly tight range over the next 2-3 weeks. If technical support levels get breached and specs react to it we could see some flush out dips, but by and large we expect July to be trading in a 76-79 cents range.

​​​​​​​Market Comments – May 18, 2017

Now that we got the squeeze play out of the way, both the market’s psychology and momentum have turned negative. Fundamentally the market is still too high and specs can’t be happy with their current book. The market may therefore continue to go lower in order to find trade support, both from new business and fixations. We expect that level to be at around 7650-7700, maybe a shade above it. 

Market Comments – May 4, 2017

The specs and the trade are in a game of chicken and it remains to be seen who ultimately has the stronger nerves. If speculators were to give up and let trade shorts out, then the July contract would probably remain in the mid-to-high 70s. At this point speculators have no reason to abandon their position based on what the chart tells them, but that could of course change.

Market Comments – April 20, 2017

The fireworks in the May contract are probably over, since we started the day with just 6,030 contracts open and there were an estimated 5,660 Mays traded today. In other words there won’t be a lot left to liquidate! It also looks like the certified stock, or at least most of it, won’t change hands during the upcoming notice period.

Market Comments – April 13, 2017

Some traders wonder why the market has not reacted more positively to these excellent export reports in recent weeks. The answer is simple – it was massive spec long liquidation and new spec shorting that kept a lid on the market. The heavy spec selling has diffused an otherwise explosive situation for now. However, in a sense it has made the situation worse, because thanks to a falling market US export sales have continued to increase at a mind-boggling pace. A few more weeks of 150-200k bales in sales and the US will for all practical purposes be sold out!

​​​​​​​Market Comments – April 6, 2017

From a chart perspective the market is at a razor’s edge, sitting right at the long-term uptrend line. At the moment the recent selloff is still to be viewed as a correction in a bull market, but a drop below this important support would change that and flush out some more spec longs. However, trade short covering would likely be there to absorb most of the selling. On the other hand, if the market were to hold over the next couple of session, the momentum could easily turn up again!