In yesterday’s Wall Street Journal, editorial, page, there was an article explaining some of the political problems the San Joaquin Valley growers have been facing over water. On a recent trip there we learned firsthand just how goofy the enviros and some politicians were over water use.
Title is California’s Fish Fry, page A12, worth a quick read. And in the book section, yet another book has been written on the historical importance of cotton, this one by Giorgio Riello, titled simply Cotton. A review appeared last week in the WSJ, Thursday, page A13. The review made this book sound very much like Stephen Yafa’s book of several years ago titled Big Cotton. In this new book Riello covers old ground by bringing up the fact that textiles drove the Industrial Revolution which began in the 1700s, and cotton drove the textile industry. Gene Dattel, of Ruleville, Mississippi, wrote a book a few years back titled Cotton and Race in the Making of America. Of the 3 books we found Dattel’s book with much more historical context, and it is probably due to him growing up in a cotton economy right here in the Delta. He knows something of what he wrote about, having been fed, clothed and educated by his family’s cotton farm.
The rain in Texas should continue into Wednesday, and is abetted by a counterclockwise flow of Gulf air into that state. The issue is not if this rain is helping the crop, as it very much is. The issue is what’s left of the dryland crop to help. Recall that the Llano Estacado crop got several incremental rains in June, and these rains were just in time to stop a lot of acres being abandoned for insurance. Then from late June till now, its been mostly dry. How many acres are left to use in estimates will now be the difficult part in determining production.
Varner 
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If west Texas dryland had a full quota, then these rains may have resulted in a limit down move. Coming as they have in mid July after many acres have already been abandoned is a huge waste according to farmers there. The districts of 10-N, 10-S and 8-S got similar rough treatment from Mother Nature, getting ample rains well after planting time. We’re taking a near-term negative bias to the market, thinking something around 8000 is where cotton will go to uncover some Chinese demand. Given a small rally this week, we may crawl into some small spec short positions.
Technicals
Dec failed today at the 89 day average, then reversed and is testing the 144 day avg at 8400. This avg coincides with a positive trend line coming off lows of Nov, June, and early July. Next support is the 200 day avg at 8000. If this leg down matches the length of the first leg down, target is 8050. Seasonal is negative.
