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The market remains in a relatively tight consolidation since October 15th as weather and harvest issues have lent support and outside market forces have also lent support but economic news and export sales news has been weak. Open interest since October 15th has continued to climb from 167,000 contracts to 189,413 now. December cotton closed higher on the session yesterday and had the highest close since October 22nd. Ideas that the delta crop is damaged and will not recover in Arkansas and a few other spots, a sharp break in the US dollar and ideas that the market will hold up well even as harvest picks up steam this week helped to support. Weather would appear to be a bearish force with very dry conditions for Texas and dry conditions for the delta and southeast through at least Monday. This may help boost harvest progress in some areas. China harvest weather has been mostly favorable for the past two weeks. Traders expect weekly export sales for release before the opening to come in well below 100,000 bales as compared with 166,000 last week. Sales for the 09/10 season were just 82,300 bales last week and 31,000 and 58,000 the previous two weeks as compared with 151,100 bales necessary each week to reach the USDA projection for the year.
TODAY’S GUIDANCE: The market still seems vulnerable to a set-back; especially if export sales remain slow and the US stock market is under any pressure. Resistance for December cotton comes in at 68.45 and 69.49 with support back at 65.05 and 63.99. A new high counts to 70.78 as a longer-term technical objective but we still believe the market may be too high to attract demand.
