Increased commercial selling had the cotton market on the defensive Tuesday.

Comments:

New-crop December cotton continues to coil like a poisonous snake with a shared name, waiting to either strike above the old high of 75.00 or slither below support at the recent low of 71.54. So far this week the trading range has remained tight, inside last week’s range from 74.78 to 71.54. Technically the market remains overbought on its daily and weekly charts, a factor that when combined with high market volatility could lead to a round of noncommercial selling.

Commercial traders sold a bit more aggressively Tuesday, as indicated by the action in futures spreads. December lost ground to the March contract as the spread moved back into a small carry. If this action continues it would give noncommercial traders another reason to liquidate a portion of their net-long futures holdings. Monday afternoonΆs bullish weekly NASS Crop Condition report, leading to a 5 point reduction in DTNΆs Crop Condition Index, provided little buying incentive.

General Comments:

December cotton was down 0.40 at 73.98 while March dipped 0.16 to 74.22. December corn finished 1/4 cent lower as November soybeans fell 8 1/2 cents and September Chicago wheat dipped 4 3/4 cents for the day.

The U.S. dollar index was 0.641 lower at 95.072. December gold was $11.90 higher at $1,371.50 while September silver gained $0.180 and September copper rallied $0.0090. The Dow Jones Industrial Average was 104 points lower at 18,299. September crude oil was $0.49 lower at $39.57. The September distillates (heating oil) contract was $.0038 higher while September RBOB gasoline was up $.0063 and September natural gas lost $0.037.