Technicals finally lined up with fundamentals on Friday, and broke through the resistance around 8500. Weather has been bullish since Thanksgiving, and demand has been bullish since Mar 2016. Regards the report on Thur, its not if but how much the USDA will raise exports.
Monsanto is in a viscous, and unnecessary legal battle in India, to retain its own patent rights on Bt seed. The issue is very basic and all encompassing, as Nuziveedu Seeds contends that the patent itself should never have been allowed. The court case began today. This years seed sales will not be affected, but it will be hell to pay if Monsanto throws in the towel, or loses.
There is a 20% chance of rain, less than 1/10, for Lubbock on 5/14 5/16. And thats the way its been since Halloween, sans one event.
US cotton is high on Chinas price, and very high on India. It should be. Cotton has been flying out of here for 3 months to the tune of Mb/week, combined crop years. The breakout Friday from the mid 80s to the upper 80s is well justified due to demand and weather, and backed up by crude reaching a 3.5 year high and the SP running up 3.5% in 3 days. Nothing in the weather looks to change, but we are more than curious come Thur to see sales and the new crop consumption figures for the world. World use hit its trough in the high-price period of 2011/12, and has been on a 20 Mb upward march since then. Last month was the first report of this year to show a decrease in world use.
Commentary and chart from Dave Toth. The trend is up on all scales with today’s continuation of the major bull market that dates from Feb’16’s 54.53 low shown in the weekly active-continuation chart above and monthly log chart below. Both these charts show understandably historically bullish sentiment levels typical of major PEAK/reversal-threat environments. But traders are reminded that sentiment is not an APPLICABLE technical tool in the absence of an accompanying confirmed bearish divergence in momentum of a scale sufficient to break the major uptrend. Herein lies the importance of identifying corrective lows and parameters like 78.55 and even 83.83 around which the risk of a bullish policy and exposure can be objectively managed.
The market’s encroachment on the extreme upper recesses of the past 6-YEAR range poses another risk to the bull, but here again, the market needs to indicate some semblance of “non-strength” via a confirmed mo failure below recent corrective lows. In lieu of such the trend is up on all scales and should not surprise by its continuance or acceleration.
In sum, a bullish policy remains advised for long-term players with a failure below 83.83 required to pare bullish exposure to more conservative levels and subsequent weakness below 78.55 to jettison the position altogether. Shorter-term traders exposed to the aimless whims of the past couple months’ lateral range are advised to first approach setbacks attempts to 86.00 OB as corrective buying opportunities with a failure below 83.83 required to negate this specific call and warrant its cover.
As always, please use protective buy and sell stops when trading futures and options.
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