GLOBAL: Cotton Futures May Drift Down
http://www.bharattextile.com/newsitems/1988841
NYCE cotton futures ended modestly higher last week due to fund buying on talks that China is expected to purchase several million bales. Close attention is being paid to any move by China to step up cotton purchases in the market. As of the last USDA weekly export sales data, China has bought 4.09 million RBs of US upland cotton in the 2003-04 marketing year (August/July), against purchases of 1.02 million RBs at this time last year.
Cotton futures would be thin and direction less as the market braces for the release of the monthly USDA supply-demand report to be released soon. The weekly USDA export sales report came in quite positive for futures, which was better than the market expectations.
USDA said US cotton shipments hit 318,000 running bales (RBs, 500-lbs each), versus trade belief that it would range from 200,000-250,000 RBs. The US cotton industry has to export more than 300,000 RBs in the remaining weeks of the 2003-04 marketing year (August-July) to reach the USDA projection of U.S. cotton exports reaching 13.2 million (480-lb) bales. US net upland cotton sales stood at 148,100 RBs.
The active May contract tested the resistance levels and retraced from there sharply. The neckline point at 66.35c will be a good support level now. As mentioned last week, a double bottom pattern was seen with the fractal tops at 76c as an important resistance level. Prices retraced even before reaching there.
The head and shoulder pattern we have been talking in our earlier up dates with the neckline point at 64.65c is still alive. A daily close above the fractal top at 76c will negate the possibility of the bearish head and shoulder pattern and further bullishness will set in. We still stick to the same wave count of a wave C is in progress as long as 76c is not broken on the higher side. The move from the peak at 84.25 to 65c is possibly a corrective wave A and the subsequent pullback to 76.20c is a wave B. The current move should be a wave C targeting close to 58c. RSI after being in the overbought zone moved lower indicating a correction to set in.
The averages, in MACD are on the verge of a cross over of the zero line in the indicator. Current prices are lower than the short- term average of 9 day EMA at 70.03c and the 50-day EMA is at 70.30cents. Look for prices to consolidate and move lower. Resistances seen at 73.95, 76, & 79c. Supports at 70.25, 68.50, & 64c respectively.
Source: Business Line