Last year’s state yield in Texas was 623 #/a, and this year we are calling it 670 #/a. Abandonment was 41.2% a year ago, and this year we have it at 38.2%. These figures are not arrived at using just the state crop indexes, but are the compilation of all 16 districts, each broken down by dry and irrigated status. Production for Texas this year is pegged at 4.85 Mb, much above several other estimates we have heard at 4.0 Mb down to 3.5 Mb. Table shows our figures for each district’s abandonment. 1-N and 1-S figures are crucial to getting the production right.
What bothers us about Texas is that we have heard of no other estimates as high as ours, and this makes for some uncomfortable musings. Whenever an estimate is released to the public, it does bring a little pressure to get it right. As for the overall US estimate, our last figure was 14.2 Mb, and the one cranked out today is flat 14.0 Mb. The 200kb were lost in TX, NC and GA. Other states inched up, as there could be some new yield records in AR, CA, and AL.
Varner View
There was the 13nth rumor of the summer about China possibly selling off some reserve stocks, but the market has heard this so much it does not respond. Technicians seem to be very larded up on the bull breakout idea, with Dec rising well into the 90s. A push above 8600 would turn on all of the “trend following” folks. And a drop below 8400 would bust up the bull party. We favor the downside breakout, but understand that a row crop with a small carryout can pretty much do whatever it wants before harvest kicks in. One more thing – exports are the number that no one wants to discuss. It’s a very difficult issue for poor cotton traders to get their arms around.
Technicals
The high of the week is right at trend line resistance. Dec did not take out the high or low of the first half of July in the 2nd half, so the market did not tip its hand either way. A seasonal low is due in mid Aug, average date 11 Aug.
