Morning Cotton - Bearish Outside Forces May Trigger Long Liquidation
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March cotton closed lower Friday, giving up much, but not all, of their gains from Thursday. The recurrence of the Covid crisis with the surge in cases has traders uncertain about future demand. The dollar was up sharply on Friday, which raised concerns about US export prospects. The stock market was lower, which was also negative to cotton. Friday's Commitments of Traders report showed managed money traders were net sellers of 673 contracts of cotton for the week ending December 14, reducing their net long to 69,636. Non-commercial, no CIT traders were net sellers of 1,497, reducing their net long to 69,214. Non-commercial & non-reportable traders were net sellers of 899, reducing their net long to 104,048. CIT traders were net buyers of 599 contracts, reducing their net long to 80,683.
TODAY'S MARKET IDEAS
With fund traders holding a hefty net long position, and outside market forces turning more negative, the market looks vulnerable to further weakness. Resistance for March cotton is at 106.94 with support at 105.24. A close under support would leave 99.76 as next technical target.
