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Tuesday, July 22, 2008
The Spec/Hedge Report for the week ending
07/18/2008 showed Specs were net Short 0.2%, a reversal of 3.2 percentage
points from the previous week’s 3.0% net Long. Specs now hold a net Short
position of 503 contracts, a reversal of 7,111 contracts from the previous
week’s net long position of 6,608 contracts. Changes in the open interest
this week showed Spec Longs lost 3,453 contracts, Spec Shorts gained 3,658
contracts, Hedge Longs gained 989 contracts, and Hedge Shorts lost 6,122
contracts. Total open interest this week was 219,395 contracts, down 2,464
contracts from the previous week.
USDA’s Cotton Crop Condition Report for the week ending 7/20/2008 showed
this year’s cotton crop was rated 21% Very Poor to Poor, 34% Fair and 45%
Good to Excellent. This compares to the previous week’s 21%, 33% and 46%,
and the previous year’s 15%, 29% and 56%. The Dow Jones USDA’s Cotton
Condition Index Report rated this week’s crop condition 91.6 up slightly
from the previous week’s 91.2 but well below the previous year’s 96.7.
USDA’s Cotton Progress Report for this week showed that 80% of the cotton
crop was Squaring compared to the previous week’s 71%, previous year’s
81%, and the five year average of 85%. The cotton crop had also reached
42% Setting Bolls, compared to the previous week’s 27%, the previous
year’s 41%, and the five year average of 44%.
Tropical storm Dolly has moved into the Gulf of Mexico and by Wednesday
should be a hurricane and making landfall somewhere on either side of the
Mexico/Teas boarder. Heavy rains should hit the cotton areas of the Rio
Grand Valley and Texas South Coastal areas.
Dec’08 open interest this morning was 165,996 contracts, up 509. Total
open interest was 220,054 contracts, up 659. Certificated stocks total
1,725,404 bales, up 4,116 bales from the previous report. There were
16,529 bales awaiting review. The 2007/08 North European A-Index was down
20 points at 77.90 and the B-Index remains unquoted. The Far Eastern
A-Index was down 35 points at 77.00. The 2008/09 Far Eastern A-Index was
down 25 points at 79.10.
As the option pit opened, Dec was trading at 72.90. Dec opened this
morning at 72.82 and made its current low of 72.79 at around 3:05AM. Dec’s
current high of 73.14(+36) was made around 8:01AM. Current Dec trading
volume so far his morning has been a very light 265 contracts. As trading
in the option pit started, Dec chopped slowly between 72.95 and 72.82.
Around 8:30AM, the selling picked up enough to push Dec down to a new low
of 72.35(-43). Some of this selling may have been inspired by the weakness
in Crude oil which was trading down about $1.00 per barrel. In Chicago,
the electronic grain markets ended their early morning session firmer,
with U-Soybeans up 11 ½ cents, U-Corn up 1 ½ cents, and U-Wheat up 3 ¾
cents. The Dollar was trading up about 5 points per the Dollar Index.
After this bout of selling eased up, Dec was able to bounce back up to
72.93. Our market continues to suffer from a lack of sizeable standing buy
and sell orders below and above the market allowing for these substantial
moves on relative light market orders. Once the buying eased up, Dec fell
back to 72.64. Twenty-five minutes later Dec had traded back up to 72.96.
Dec topped out at this level and then fell back down to a new low of
72.18(-60). Dec then chopped erratically between 72.20 and 72.40. This
lasted for about fifteen minutes. Then another wave of selling hit the
market. Crude oil was collapsing and was down over $4.00 per barrel. This
new selling pushed Dec down to a new low of 71.96(-82). Dec then had a
good recovery bounce up to 72.92. As the Chicago grains were getting ready
to open, Dec was trading around 72.77. The grains came out trading higher
but quickly came under heavy selling pressure, with Soybeans trading down
about 16 cents lower, Corn down about 11 cents and Wheat down about 4
cents. The grains sell off put additional pressure on our market with Dec
being pushed down to 72.43. However, Dec then had a quick recovery bounce
up to 72.70. Trading then turned very erratic with Dec bouncing between
72.70 and 72.27. Around 11:25AM Dec was hit by a strong wave of selling
that pushed Dec under 72.00. This time heavy spec sell stops were touched
off, propelling Dec down to another new low of 71.60(-118). This latest
wave of selling was again prompted by a collapse in Crude oil which had
traded down over $5.00 per barrel. Then over the next fifteen minutes Dec
was able to grind its way back up to 72.30. Dec then chopped sideways
mostly between 72.25 and 71.95. Around 12:30PM there was a pick up in the
buying which moved Dec through 72.30 and Dec continued to trade up to
72.62. Dec’s upward momentum stalled at this level and Dec then slowly
stair stepped back down to 71.90. Dec finally stabilized at this level.
Dec then chopped between 71.90 and 72.14. Around 2:00PM Dec spiked up to
72.20. However, Dec was then hammered back down to 71.61. During the one
minute settlement period, Dec chopped from 71.61 down to a new low of
71.52. After this period, Dec traded to a new low of 71.51(-127). Dec then
ranged from 71.51 to 71.84. Dec’s last tick of the session was at 71.83.
Dec closed weak and near its low, settling at 71.58(-120). The Oct/Dec
straddle traded about 245 times, ranging from 280 to 288 points. The Dec/Mch
straddle traded about 649 times, ranging from 532 to 547 points. Estimated
volume was 11,500 contracts. Previous day’s volume was 7,763 contracts.
|
Daily Moving Averages: |
Dec |
Oct |
| 3 Day Average |
72.53 |
69.67 |
| 7 Day Average |
72.89 |
70.03 |
| 21 Day Average |
75.49 |
72.38 |
| 40 Day Average |
75.99 |
72.62 |
| 50 Day Average |
76.70 |
73.36 |
| 100 Day Average |
80.04 |
76.98 |
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| RSI: |
31.6 |
32.5 |
|
Contract |
High |
Low |
Previous |
Close |
Change |
| Oct '08 |
70.01 |
68.66 |
69.89 |
68.76 |
-113 |
| Dec '08 |
73.14 |
71.51 |
72.78 |
71.56 |
-122 |
| Mar '09 |
78.32 |
76.96 |
78.18 |
76.98 |
-120 |
| May '09 |
79.77 |
78.70 |
79.90 |
78.70 |
-120 |
| July '09 |
81.05 |
80.00 |
81.10 |
79.95 |
-115 |
| Oct '09 |
---- |
---- |
83.20 |
81.77 |
-143 |
| Dec '09 |
85.00 |
83.88 |
84.97 |
83.79 |
-118 |
| Mar '10 |
---- |
---- |
86.57 |
85.39 |
-118 |
| May '10 |
87.50 |
87.50 |
87.57 |
86.41 |
-116 |
| Jly '10 |
---- |
---- |
89.52 |
88.36 |
-116 |
Please address
comments to Weil Brothers-Cotton, Inc., at weilbros@weilbros.com.
Additional Market Information,
including Cotton Options, can be obtained from The New York Board of
Trade.
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