World Weather calls for small rains of to in hard red wheat areas next Wed/Thur. Also noted is a report showing Cal reservoirs at roughly 40% to 50% of capacity. This is low but manageable. Weather Underground has cut a third of the forecast amount for Lubbock on Fri/Sat, from 0.65 to 0.45.
In another important arena, industrial metals caught fire today, with upward surges in silver, copper, and palladium. They may be catching up to similar moves in energy, lumber and the stock markets. This all-together movement creates a tailwind for cotton.
Varner View
TX 1N is in the worst shape for moisture, followed by 1S, then 6. Those districts remain in extreme drought. 2N, 2S, 7 and 10S could use more rain but are not in dire condition now. There is a lot of conjecture that winter wheat abandonment may rise, which gives the farmer an insurance payment and the option to plant another crop. Cotton would seem to be favored as it requires less water than others. No guess for sales tomorrow, as our guesses miss too much, and too often. One trader called it Mb. The two pillars of price support are still there, those being weather and demand. Action looks tired. Price history is negative into late spring.
Technicals
4/23 falls on a 34 count from the major high of 3/06, and it falls on a 144 count from the major low of 10/03 (counts include holidays). This day is also a 3 month interval from the high of 1/22. Notice day is on 4/24, so be alert for a price reversal early next week. May has moved up as notice approaches, an event that usually sees lower prices. Action over last two months is sideways. The third of three negative seasonals lines up with Fib counts on next Tuesday.
As always, please use protective buy and sell stops when trading futures and options.
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