Cotton (NYBOT:CTZ14) appears to be a prime canidate for a big directional move today as the World Agricultural Supply Demand Expectations (WASDE) report is scheduled to be released later today (11 a.m. CST).
The last few days have played host to relatively quiet, consolidating price action as the market gets ready for today’s reprots. Crop progress yesterday did show the percentage of good/excellent crop was down 1% from last week and the percent of poor crop remains at extremly low levels (14%). Bloomberg took a poll of industry experts and the preliminary expectation is for an increase in both U.S. and Global production. If today’s report comes out on par with analyst expectations, traders should antiicpate additional selling pressure as ample supplies will continue to keep prices pressed to the downside.
From a techncial standpoint, the market has been churning sideways between 63.75 – 65.08 for a little over a week now. Certainly this repor could produce a breakout of this range, but the $1,000,000 question is in which direction? Given the data we’ve been receiveing, it would appear that a downside breakout would be concurrent with the bearish inventory data over the past few months; however, a miss on today’s number could certainly sway the crowd in the opposite direction.
Any sustained weakness belwo 62.00 leaves the door wide open to further selling pressure as there is not much technical support below here to hold this market up. The first level of resistance for this market to overcome is at 65.08 and the negative near-term momentum will likely remain in effect below 69.92.
Dec. ‘14 Cotton 30-minute Bar Chart (e-Signal)