The track will be northeast, which will carry it over just about all of the SE crop. Open bolls in those states are running about 2/3, so this is definitely not a rain they want.
A lot depends on how Karen dissipates once landfall is reached. Rainfall up to 3” can be handled by the crop with minimal damage to grades and quantity, but over that level will cause lint to string out and oils will be washed from the plant. The market has pushed up 4c so far on this storm, so Sun-Tue will tell us much if the price increase is worthy.
Farmers are in full harvest mode now, and there is hardly a care or a look given to the new crop Dec 14 contract. The Red Dec has crawled over 8000 recently, and today hit a 4 month high at 8125. This is up from 7660 in Aug. The best case scenario for Dec 14 is that China decides to change nothing next Mar and continues to stockpile cotton. If that happens, the Dec 14 will then tend to reflect supplies and availability outside China, and one could make a case that Dec 14 takes a few rides over 85c, much like Dec 13. The worst case scenario is that China decides to go to a direct subsidy to farmers, and also decides that carrying 18 months of usage is much too much. Any sort of wind-down of inventories could be catastrophic for prices. The middle road case is that China decides to somehow restrict cotton acreage over several years, thereby easing down their record stockpile.
Chart today is the Red Dec, which has just reached the 50% retrace of the move from 8600 to 7650. The efficiency of the chart is not high, as volume is very light and OI is only 3300. Dec has reached an “overbought” status regards momentum. Hedgers can sell 8125 area, with an eye to more hedges at the .618 retrace at 8238. Specs best trade elsewhere.