Cotton Prices Experience Wild Trading Session

Cotton Futures---Cotton futures in the December contract experienced a wild trading session all due to the crop report which was released this afternoon sending prices to a 7 week high at 80.50 before selling off closing around 79.05 up about 9 points for the day.

The crop report stated that production was estimated to be around 18.408 million bales which was 1.355 lower than expected due to the fact of major cuts in the states of Georgia and Alabama due to Hurricane Michael sending prices sharply higher before profit taking ensued.

The report also stated that carryover levels or ending stocks were lowered in the United States and worldwide which is a bullish fundamental indicator as well, but weak demand has been the main culprit to keeping a lid on prices here in the short term.

I have been recommending a bullish position from around the 79.60 level and if you took the trade I would continue to keep the stop loss at the contract low of 75.37 as the volatility is very high as I don't want to be stopped out and then see the market rally right afterwards.

Prices are still trading above their 20 day but below their 100 day moving average as I will raise the stop loss in next week's trade therefore the monetary risk will be lowered significantly, but I still believe the fundamental and technical picture for this commodity remains bullish as I think prices are cheap.

TREND: ---HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: HIGH

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