Benzene is a crude derivative, which is used to make caprolactum, which is used to make nylon. Which is a faux fiber that irritates skin, gives off an oily sheen, emits poisonous gas when burned, and is a cheap substitute for cotton. Chart below shows this key synthetic fibers price has basically been flat since last fall. At the same time the price of cotton has gone up 30c, or 50%. Expect much heavier mill spinning ratios to faux fibers over cotton.
Other than a few months during the 2010/11 year, cotton has risen to its highest ratio vs soy since Oct 2003, same for wheat. Vs corn, cotton is at the highest since Oct 2005. If ratios stay around this level, expect the world to reach back to the old record highs for acreage, between 88 to 89 M made in 95/96, 04/05, and 11/12. 88 Ma with a yield of 700 #/a produces a crop of 128.3 Mb.
Frontier Weather using GFS model shows rain in 1N, 2N and 2S Mon/Tue. This model shows rain near or on 1S from 6/16 to 6/22, but this changes daily.
Varner View
Comparing apples to apples, the 13/14 futures high of 9735 is within a penny of this years high. The carryout ratio then was 16.4%. In order to get a similar ratio, exports have to read 16.85 Mb. That would be 1.35 Mb more than the current USDA estimate. Nothing is ever exactly alike, but that gives us some idea as to what the market is trading for. Some nice rains fell in 2N, 2S and the eastern side of 1S. Its going to be a jumbled up mess trying to figure abandonment in 1S this year. The RGV last got rains of to 3.5 weeks ago. Badly needed.
Technicals
Thanks to a tech report from Nicholas Gentile, we can see that RSI for CTZ18 of 92% today was last equaled in Oct 2010. Once achieving that lofty level, CTZ10 dropped from 155.00 to 110.00, a loss of 29% in only 2 weeks. That period was of course in the beginning of the record price year, so all is not equal. Today Dec ran through the double high of 9373 but was unable to close above it. A nice star formed, but to confirm a top a lower open and close must occur on Mon.
As always, please use protective buy and sell stops when trading futures and options.
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