Rising Dipole

agricultural, Charts, Commentary, News, Technical Analysis

The M1 money supply is floating back up to near normal levels in India, after last falls demonetization by PM Modi. This has resulted in freeing up some spot cotton, as most of the Indian crop sat in sheds and warehouses due to farmers hoarding their harvest. A couple sources say India has begun exporting again, so the bottleneck appears to be broken.

 

Countries representing two of the 3 most influential commodity currencies have stormed into political turmoil. Brazils Temer and Uncle Sams Trump are being accused of various wrongdoings, and the sudden exposure of these has sent both currencies into tailspins. The fall in the $ is a bullish force, while the fall in the Real is bearish. The other major commodity currency is the Aussie $, and so far no political catastrophe has happened there, yet.

 

Good news keeps rolling in from India, as that dipole thing indicates not only an early monsoon beginning, but a very ample rainfall. We shall see.

Varner View

The sales report today had something for everybody. Old crop sales were good at 127 Krb, with full deck countries of Turk and Viet high at 52 krb each. Shipments were very good at 399 krb. New crop sales total was outstanding at 170 Krb, as China was high at 71 krb. Now for the bad news. No fewer than 8 countries were listed as cancellations, most very small. Most importantly was India, with a cancel of 23 krb. High price and higher spreads are doing their dirty work to force cancels. Expect more of these.

Technicals

Its a split-screen market, with July having one set of chart nuances and Dec another. Re the July, as of 1100 today it has come back down to a previous trend line, which begins at the high of 8027 then crosses the high of 7974 (4/26), and crosses today near 7950. Dominant feature on this chart is the bearish engulfing signal made on Tuesday. Re the Dec, it remains in a 7215/7515 box that is nearly 4 months old. Dec has gone through 3 up swings and 3 down swings during this time. The continuous Dec chart has two very reliable trend lines that have held all lows and highs since early June, nearly a year. That chart shown below.

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