Thought Of The Day
“What we have here, is failure to communicate.” Cool Hand Luke
The USDA SD report and sales/exports delayed till Friday.
Wire services have been running stories suggesting US production decrease at 3/4 Mb, and the market has pretty much accepted this as true. Cuts are seen in OK, KS and the Llano Estacado, with a lot of classing data unclear as to just how much cotton is still out there. We cut 1/4 Mb off the above states, but gains in the Delta and SE pretty much kept things neutral. Hard to tell, but the market accepts a loss of 3/4 Mb as fact.
Dec is poking up against strong resistance, via the double low at 7225 made by Dec 19. During winter decision time a year ago, Dec ranged from 7725 to 7775, averaging 7500. Dec 20 has closed much of the gap with year ago, but remains 3c below the avg that gave us plantings of 13.7 M acres. If Dec can maintain itself +7000 for a few weeks, then the current acreage decline of 12% will be cut in half.Varner View
What price is worth a production cut of 3/4 Mb? It gets complicated when a cut in exports may also come. That is the normal modus operendi, but the last report showed only a production cut, and left exports standing. Assuming wire services are correct in predicting production near 19.5 Mb, consider what the US was looking for last May. It was possible, using some very good yields and low abandonments, to visualize a crop close to 25 Mb. So Mother Nature has hacked away at this crop, slashing nearly 5 Mb from what was near perfect in Spring. Repeat – farmers need to lean into Dec 20, no questions asked.
Mar has made exactly 21 new highs since the Aug low, a key Fib and candle count.Re Dec, if wave 5 = 3, target 7275. A 62% retrace from contract high to low is 7280.
Have A Great DayCotton Traders
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