Doldrums Approaching

agricultural, Commentary, News

Sales finally cooled down, 16 krb old and 158 krb new. One week doesnt make a trend, so there is much unknown as to how these play out the rest of the summer. Shipments were poor at 158 krb, well below the target average. After so many weeks of outstanding numbers, this week has to be a little worrisome. For 7 months demand has been medium at worst and sizzling at best, so its too early to trash this side of the balance sheet.

 

A swath of rain in the middle of the country was enough to bust the Chicago markets, after mostly neutral reports. Weather is not an issue for cotton at the moment, so it looks like our market is the tail following the dog.

Varner View

The old crop numbers are pretty much set, but new crop numbers are fast moving targets. Both production and demand have been surging in recent weeks and months. The world supply and demand for new crop appear to be fairly balanced, with the big change being a shift in stocks from China to others. We are neutral for the moment, but would sell a decent rally on weather.

Technicals

Todays breakdown suggests cotton will soon take out the low of 6615, after a 3 week choppy correction. The 6615 low looks like a 3, and the 4 was the 6892 high of 7/07. The final 5 should be nearby, and should not be much deeper than 6615. A stronger correction should follow after the 5th low is in place.

Varner Brothers
325 Cotton Row Cleveland MS 38732

800-4-VARNER

(662) 846-6636

info@varnerbrothers.com


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