Back on Jan. 7 I wrote about Cotton in Market Pulse saying the COT is signaling for higher prices. Back then March 2013 cotton had closed the week at 75.05. So what has happened over the past 2-months?
May 2013 Cotton opened last week at 83.16 and closed the week at 85.40. Last week’s export sales released on Wednesday did reflect increased demand for cotton.
Proceed to Page 2 for the latest COT Data...
COT Data
In the Disaggregated COT report last week we saw Producers drop net shorts to -173,689 contracts, Managed Money dropped net longs to 50,053 contracts, and Swap Dealers dropped net longs to 54,006 contracts. Bullish posture last week with a minor bear move last week. So you can see from the last cotton Market Pulse the COT was right on.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
Fundamentals
Looking at the daily chart starting in February May cotton seemed to get stuck between 82-84, with a one day test of 85.00. Now see cotton closing over 85.00 for the past three trading sessions. While ADX did drop from above 60 (very strong trend) to under 25 the past few weeks, we now see ADX has turned up again and DI+ has crossed up over DI- with DI Differential rising. Stochastics are back in overbought territory. So the daily charts reflect the bulls taking a breather in February.
Click to enlarge.
Now for March they look like they may have caught their breath. Could we see a break above 90 soon? With a possible drop of 23% U.S. cotton acreage, that may be in the cards. We will get confirmation of this on March 28 when the Perspective Plantings will be released.
Have a prosperous trading week.
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