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Varner Brothers
Thought Of The Day

I was making love to this girl and she started crying. I said “‘Are you going to hate yourself in the morning?'” She said ‘”No, I hate myself now.'”

Rodney Dangerfield

Varner Brothers
325 Cotton Row Cleveland MS 38732800-4-VARNER(662) 846-6636

info@varnerbrothers.com

OA Cleveland, long-time friend of ours, and Tom Bell, has come down hard on the bear side of our market. He sees Dec as having a chance of 15c down, effectively targeting something around 60c. He advises planters to get up to 60% hedge, now. We recall getting some hoots and catcalls a couple weeks ago when we suggested up to 75% hedged on new crop. Cleveland cites the widely-known ratio of on-call sales vs purchases, and the hot demand, as reasons for old crop to test 80c. He went so far as to predict an old crop carryout with a 3 in front of it, meaning exports up to 13.7 Mb.

If Dr. Cleveland is right, then the market is facing a period it has been through many times in history, with a tight old crop leading into a surplus new crop.

 

Varner View
Informa released their cotton acreage estimate at 11.1 M, up from 10.8, which was up from 10.4. These boys seem to be crawling toward other estimates. Our estimate is 11.7 M, and we would not be surprised to see something near 12.0 M. However, the March report will likely not show all of the acres, as farmers tend to lowball the surveys. New crop planting prospects look good, with ample water in the far west, and adequate water on the Llano Estacado. South Texas reports some replanting is necessary, but ground moisture is high.
 


Technicals

On the Dec continuous chart below, since late Aug one can see 3 upward moves, all of which are roughly the same. From 8/31 low to 9/22 high, the move was +695 points. From 10/12 low to 11/22 high, +709 points. From 12/20 low to 3/09 high, +698 points. Regards the seasonal Mar high due on average date 3/10, odds increase 5%/day over the next 2 weeks, that the high has been made. The latest seasonal high was made on 3/26/2014, in the last 2 decades.

 
March 13
Have A Great Day
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