Thought Of The Day
“Stop complaining Beetle, remember ‘the meek shall inherit the earth,'” Sarge. “Well, I’ve had it with this earth and I don’t want to inherit one speck of it.” Beetle Bailey replied, as he dug a trench.
After the worst drought in a century, followed by horrendous fires, the drought in Australia has been suddenly and dramatically broken. Torrential rains from 10″ to 20″ pounded SE Aust in just a 48 hour period, resulting in flooding, washouts and slope failures across their Continental Divide, called the Great Dividing Range. These rains won’t do much for the small acreage salvaged in cotton areas, but they will go a long way to replenishing water levels in storage reservoirs for next year.
And as if to add a double exclamation point on similar weather, the Llano Escado has gotten, and is getting the best rains of this calendar year, and the best since early last fall. As this report was written a swirling derbish of a loaded low pressure system was pouring rain, sleet and snow on Comanche territory. It looks like broad coverage with amounts +1″, or more.
Its way too early to trade weather, but the major precipitation events in two of the most critical cotton areas in the world make situations better off today than a few days ago. Australia can capture and hold water, and the caprock on the Llano Estacado can do a pretty good job also of keeping water in soils after a rain. Regards the report tomorrow, we cut production a hair, and increased exports a little, to get a very slight decrease in end stocks. We don’t think this report will matter much, as it will be the approaching notice period that may push price one way or the other. Our hope is the market will weaken into mid Feb and notice, and perhaps set up a buy.
The Mar $ broke out to a contract high, and the spot continuous $ is near the Oct low, the lowest level in nearly 3 years. A seasonal high is due today, and a low is due 3/15. Spot is up against a trend line coming off highs in Jan 2017 and Oct 2019. So far no reversal or top pattern has been made.
Futures and options trading involves substantial risk of loss, and may not be suitable for everyone.
Varner Brokerage, Inc. accepts no liability for any direct, indirect, incidental, or consequential damages or losses arising from the use of this report or its content. This report is not to be construed as providing investment services in any jurisdiction where the provision of such services would be illegal.