Cotton Futures
Cotton futures in the May contract is trading higher for the 2nd consecutive session up another 60 points at 79.56 right near a 3 week high after trading sharply higher in yesterday’s trade bottoming out around the 76.50 level as I had a bullish bias in this market, but I’m currently not involved.
Cotton prices are trading above their 20 and 100 day moving average as the trend has turned higher, but really it’s mixed as I think this rally was basically based on oversold conditions as the large money managed funds are long about 70,000 contracts as they still believe higher prices are ahead.
Traders are waiting for next month’s USDA crop report which will show planting intentions as I think they will be higher than the 2017 level but we will have to see what that report states, however, I will wait for the chart structure to improve which still could take a couple more weeks, but I’m certainly not recommending any type of bearish position as strong demand and a poor 2017 crop continues to support prices here in the short term.
The next major level of resistance is all the way up at 82.50 as I think volatility will certainly expand once planting season arrives as then the weather situation will be the main focus to dictate the short term trend.
TREND: MIXED—HIGHER
CHART STRUCTURE: POOR
VOLATILITY—INCREASING
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