Sales at nearly 80krb were pretty good, considering the market averaged 88.50 during the sales week. Turkey took the highball figure of 54krb. The US needs to sell an average of 140krb/week to make the target, or, if one adds a 600krb for the roll, the average needed is 153krb. Our guess is that with prices $50/b lower than just a couple weeks ago, mills should step up for some ownership.
A lot of outside has been created in emerging market countries, with key currencies taking a beating. Seems that even though the Fed did not induce inflation in the US, they did create an inflationary bubble in countries such as India, Brazil, Indonesia, etc. Interest rates have jumped as those countries have moved into current account deficits. One has to wonder if what they are going through lies just ahead for the US as the Fed tiptoes toward the dreaded taper. Commodities likely will not fare well during the tapering period, although no one knows when it will begin. Even though the Fed has kept expanding the balance sheet, markets are pretty good at pricing in the future, even if its 12 to 24 months out.
Our bias for cotton during what may be a very long exit by the Fed of its $4T balance sheet, is for lower prices. Throw in the Chinese situation and cotton is even more bearish. But timing is everything, and the only thing harder to predict than Fed tapering is when or whether or not China will change its inventory policy for cotton. We therefore will maintain a bearish view on cotton, but after this market went on a wild rollercoaster this month, we want to pick our shots carefully.
The Dec eased below the 200 day avg today at 8350, and is registering a puny 2% on momentum. This extreme low value suggests the market is oversold, but it can easily alleviate this by a quick bounce and/or sideways movement. The spot chart is once again testing a positive trend line coming off lows of Nov 2012 and June 2013. Its 200 day avg is at 8260, as Oct is trading now at 8400.