Archive for October, 2013

Dec. 13 continued its downward descent today through the 80.00 and 79.00 levels, bottoming for the day at 78.76 and settling at 79.21 for a loss on the day of 148 points. For tomorrow the limit for all ICE cotton futures contracts will be 300 points.
The catalyst of today’s further decline in price was the belated US export report for the week ending Oct 3 this morning by USDA-FAS; net upland sales were abysmal at a mere 44K RBs. Yet, it was likely less the 44K figure and more the 72.8K RB figure for cancellations that sparked the selloff.

Our outlook period forecast currently suggests that either continuation of the downtrend or brief consolidation period is the most likely path for Dec 13 in the near-term. Our proprietary conditional probability analysis, for tomorrow, concurs with the Average True Range technical indicator in signaling for increasing market volatility within Dec 13 trading action tomorrow.

Dec. 13 moved through support at 82.11 and 81.72 today as the front month settled at 80.69, for a loss on the day of 176 points. Dec 13 traded within a 232 point trading range (80.52 – 82.84), that was largely on the negative side of yesterday’s settlement. Volume quickened today for Dec 13 as well as across all active contracts, with approximately 26.7K and 38K lots traded for Dec 13 and in aggregate, respectively. OI decreased again on Tuesday; OI was approximately 115.2K and 202.3K for Dec 13 and across all active contracts, respectively.

The standard technical picture for Dec 13 is bearish. However, the US dollar, as measured by the standard index value, remains weak. Physical on-call sale fixations against Dec 13 may also help to slow further downward movement, but continued long liquidation of Dec 13 coupled with US harvest pressure will probably mitigate attempts at upward momentum.

Dec. 13 moved through support at 83.60 and 83.50 today as the front month settled at 82.45, only 1 point off its daily low. Dec 13 traded within a very tight 61 point trading range (82.44 – 83.11), that was nearly all on the negative side of yesterday’s settlement. Volume slowed today for Dec 13 as well as across all active contracts, with approximately 8.1K and 11.9K lots traded for Dec 13 and in aggregate, respectively. OI decreased again on Friday for Dec 13 as well as across all active contracts in aggregate. OI was approximately 116K and 202.4K for Dec 13 and across all active contracts, respectively. Mar 14 gave up 53 points on the day, as it traded within a restrained 58 point range (83.69 – 84.27), the net effect leaving the Dec 13 – Mar 14 spread weakened at (127) on the day (down 8 points from yesterday). ICE certificated stocks increased significantly again today to stand at approximately 86.3K bales; approximately 38K bales are currently awaiting review for certification. The Cotton Outlook A-Index was flat today at 89.40. CZE-traded cotton in China settled modestly higher overnight while PTA, a major precursor to polyester production, finished lower.

For tomorrow, our overall analysis predicts that the most likely directional outcome is a loss on today’s 82.45 settlement. Our outlook period forecast currently relays that, with today’s support break, daily high, low and settlement values for Dec 13 are likely to move lower in the near-term. There is nothing, technically, that suggests that Dec 13 will move swiftly higher to challenge overhead gaps. Our proprietary conditional probability analysis, for tomorrow, does not concur with the Average True Range technical indicator in signaling for decreasing market volatility within Dec 13 trading action tomorrow, particularly to the downside.

Dec. 13 moved slightly lower today as the front month eased down 5 points to settle at 83.06. Dec 13 traded within a very tight 60 point trading range (82.80 – 83.40), making its high during the overnight hours. Volume slowed today for Dec 13 as well as across all active contracts, with approximately 8.6K and 14.7K lots traded for Dec 13 and in aggregate, respectively. OI decreased again on Friday for Dec 13 as well as across all active contracts in aggregate (Mar 14 OI was up slightly); OI was approximately 117.2K and 203.5K for Dec 13 and across all active contracts, respectively. Mar 14 gave up 7 points on the day, as it traded within a restrained 58 point range (83.98 – 84.56), the net effect leaving the Dec 13 – Mar 14 spread very slightly weakened at (1.19) on the day (down 1 point for yesterday). ICE certificated stocks increased significantly again today to stand at approximately 70K bales; approximately 40K bales are currently awaiting review for certification. The Cotton Outlook A-Index gave up 52 points to settle at 89.43. CZE-traded cotton in China settled modestly lower overnight; PTA, a major precursor to polyester production, was finished lower as well.

The technical picture for Dec 13 continues to remain weak. However, the US dollar, as measured by the standard index value, remains weak as well and Dec 13 has failed to settle below 83.00 during the recent downtrend. By some technical indicators, Dec 13 also exhibits an oversold condition as well. Fundamentally, Dec 13 absorbed a significantly bearish increase in this season’s Indian production estimate from the CAI and still failed to move to new lows for the downtrend while only settling 5 points lower on the day.
For tomorrow, our overall analysis predicts that the most likely directional outcome is a gain on today’s 83.06 settlement. Our outlook period forecast currently relays that while further price dips to test previous resistance at 82.50 and lower may occur, settlement values near those levels is unlikely in the near-term. There is nothing, technically, that suggests that Dec 13 will move swiftly higher to challenge overhead gaps. Our proprietary conditional probability analysis, for tomorrow, concurs with the Average True Range technical indicator in signaling for decreasing market volatility within Dec 13 trading action tomorrow.