Dec. 13 moved slightly lower today as the front month eased down 5 points to settle at 83.06. Dec 13 traded within a very tight 60 point trading range (82.80 – 83.40), making its high during the overnight hours. Volume slowed today for Dec 13 as well as across all active contracts, with approximately 8.6K and 14.7K lots traded for Dec 13 and in aggregate, respectively. OI decreased again on Friday for Dec 13 as well as across all active contracts in aggregate (Mar 14 OI was up slightly); OI was approximately 117.2K and 203.5K for Dec 13 and across all active contracts, respectively. Mar 14 gave up 7 points on the day, as it traded within a restrained 58 point range (83.98 – 84.56), the net effect leaving the Dec 13 – Mar 14 spread very slightly weakened at (1.19) on the day (down 1 point for yesterday). ICE certificated stocks increased significantly again today to stand at approximately 70K bales; approximately 40K bales are currently awaiting review for certification. The Cotton Outlook A-Index gave up 52 points to settle at 89.43. CZE-traded cotton in China settled modestly lower overnight; PTA, a major precursor to polyester production, was finished lower as well.
The technical picture for Dec 13 continues to remain weak. However, the US dollar, as measured by the standard index value, remains weak as well and Dec 13 has failed to settle below 83.00 during the recent downtrend. By some technical indicators, Dec 13 also exhibits an oversold condition as well. Fundamentally, Dec 13 absorbed a significantly bearish increase in this season’s Indian production estimate from the CAI and still failed to move to new lows for the downtrend while only settling 5 points lower on the day.
For tomorrow, our overall analysis predicts that the most likely directional outcome is a gain on today’s 83.06 settlement. Our outlook period forecast currently relays that while further price dips to test previous resistance at 82.50 and lower may occur, settlement values near those levels is unlikely in the near-term. There is nothing, technically, that suggests that Dec 13 will move swiftly higher to challenge overhead gaps. Our proprietary conditional probability analysis, for tomorrow, concurs with the Average True Range technical indicator in signaling for decreasing market volatility within Dec 13 trading action tomorrow.