Red Moon, Red Cotton

Although another quiet day so far, December continued it’s move towards 81.88. The new crop contract made new highs for the move once again as export sales have been decent and planting worries take the spotlight. The light volume prevents any major moves and fresh data is lacking until we reach Thursday’s export sales report.  Chinese prices overnight were mixed with May closing at 126.09 cents and September settling higher at 126.90.  The Delta is too wet in some places but the next couple of days are expected to be dry; the weekend will bring another round of moisture and possible frost. The frost in the delta is more of a concern for corn than cotton. Up to half an inch of rain is finally expected in Texas high plains but the wind that comes with the Spring season will prevent the moisture from settling. Between Thursday and Friday, south Texas is expected to see an inch of rain with thunderstorms and wind.

The Certified stock builds once again and is bearish for nearby contracts; the majority of the stock is 2013 growth as they have recently sold off the older bales. This also tells us that some of this cotton may be from what was canceled on recent export sales reports. Open Interest steadily depletes in May and increases in July; July OI is just over 93,000 while May has fallen near 28,000 and Dec has moved towards 50,000 (also increasing).

Rumor has it that China is using their export quota on affordable cotton in Australia, Benin and Burkina Faso rather than the U.S. – mainly because we do not have much available.

May and July are caught in a sideways move – Dec remains in an uptrend despite current weak prices on the board.

ECTN14 ~ Daily_04152014_103413am ECTK14 ~ Daily_04152014_103353am ECTZ14 ~ Daily_04152014_101656am


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WRITTEN BY Alyssa Badger

Alyssa started her career in 2008 at the Board of Trade managing a firm that had a primary focus in grains. The nucleus of her position centered around order entry and research development; from there, Alyssa's enthusiasm for commodities continued to grow and expand. This enthusiasm lead her to move to West Texas and assist in hedging for the largest originator of U.S. cotton to textile mills worldwide. Alyssa has now settled back in Chicago as a Trading Consultant for Highground Trading, Inc. Contact Alyssa