Winter Solstice Happy Hour
Cotton traders can enjoy next Monday during happy hour. About an hour after sunset, Jupiter and Saturn align and come together for what will look like one gigantic star. This will be in SW part of sky, and the planets will also be near the moon. It will be visible +/- 2 days of Solstice.
Regards new crop, Informa released an acreage estimate, pima included, of 13.058 M, which was up a few hundred thousand over their previous. This is about +900k above this year, and a lot of traders are turning flips in disbelief. Consensus opinion is that cotton will lose acres next year, due to price, relative price, and poor yield. What distorting a normal projection is the huge number of prevent acres that never got counted as "planted." Recall before the Mar Intentions report, there were several estimates +14.0 M, one up to 14.7 M. The current price of Dec at 74c is mildly seductive, and cotton can compete easily with row crops, although soy beats all. Informa's estimate is a credible one.
In 8 of the last 10 days, cotton closed higher, and was only down marginally on the 2 down days. Today is the 11th in a row when the low did not violate the previous day's low. This is a pretty good indication of sustained spec/fund/managed money piling in. COT report next week should show a sizable rise of spec longs. The $ took a day off from its normal plunge. A turn in the $ would be the dominant catalyst for a reversal in cotton. Other than robust demand, a 5 Mb reduction in the US crop since May, a $ that has lost 14% since March, cotton has no legs to stand on. Southerners do love satire and irony.
It is no coincidence that the seasonal high due for cotton on 1/02 lines up with a seasonal low in the $, same day. Both seasonals for both markets have worked well this year. We will get interested again in potential reversals in a couple weeks. Cotton has a retrace and some old highs in the 7800 area, and the $ has a 6 year low about 175 points below current price.