New York cotton prices opened lower and stayed down all day today after being up the previous three. December futures traded in a 60 point range between 5350 and 5290 and settled at 5301, down 70. The lower opening was thought due, at least in part, to disappointment with the export numbers, since reaction to poor exports sales was a topic prior to the opening. Traders also pointed to the failure of December to have penetrated resistance above 5400 late yesterday. Consensus has been pointing to 5430 as a level where buy stops could be situated and the inability to reach that area may have contributed to prices declining. However, it isn’t unusual to see prices back down some after the strength shown over the past few days. December did seem to find support again around 5300, an area which needs to hold.
Specs were seen on both sides, as December retraced its step, actually moving below 5325, down to 5300 in early dealings, but returning above. Options again contributed with the sale of Dec 56 and 53 calls, with perhaps as many as 500 of each getting sold over the course of the day. Another large volume option trade involved the Dec 70 calls, 200 were crossed and 400-500 traded outright, although 400 of those went between two paper brokers. The Dec/March spread traded between 290 and 295 and seemed firm with locals on both sides. Volume was light, especially during the mid-session, which is now a time when prices seem to chop sideways.
For whatever reason, I remain friendly to prices. I realize that I cannot give you any news that has provided the strength seen over the previous few days, other than a bounce from the new lows set last Friday. Sure, the July crop report is now out of the way and weather may soon become a focus again. Technically, prices remain in a sideways to down trend, with resistance seen at 5399-5405, and 5426 being a logical level for the placement of protective buy stops. A close above there would be constructive and provide impetus for additional strength. Yet, a close 5188 resumes bear trend forces and would compel a press to new lows.
Jurgens BauerJurgens@gmail.com(212 ) 748 - 1388 trading floor (973 ) 652 - 4694 mobile (212) 742-5284 fax