– N23 continued its volatile ways over the last week having traded in a 440 point range between 82.76 and 87.16, before closing the week up 270 points at 86.05! Volume was once again good at 48,850 contracts daily with new crop December open interest now about 23k over July with the GSCI roll period beginning next Thursday 8th June and lasting for 5 consecutive days.
– Z23 was less volatile trading in a 353 point range between 78.96 and 82.49 before closing up 131 points at 81.85. The N/Z spread continued to be something we always prefer to avoid (especially at this time of the year) closing the week 420 points N over Z. The widow maker N/Z spread may yet have some more pain for those left in it!
– Last year N/Z 22 saw a similar squeeze into July expiry which punished anyone waiting to the last minute to fix. In truth, it meant buyers were forced to fix at levels that bore no relation to what the cotton could be spun profitably at, only to see prices collapse post July 1st notice day. Some of these sales were fixed in the 160’s cost and freight which subsequently proved to be the worst purchases of the year.
– For the time being, the rains in Texas seem to have been largely ignored with Z23 toying with recent highs at 84c/lb.
– The one day holiday delayed USA Export sales report was a good one with sales of 267,800RB of which 83% were to China with Turkey a very distant 2nd! Sceptically we believe these sales may be being reported a couple of weeks late because not many sales are being seen in the traditional Far East markets where it remains very quiet! The bullish sentiment we read about on twitter appears largely USA based and with no disrespect meant, the tweets seem to have little clue as to what is happening in the ROW!