Fed Speak
“When a recession comes, the Fed is likely to have less capacity to cut interest rates to stimulate the economy than in the past, due to rates being close to zero,” Chairman Powell. And this from Lou Brien: “A conceit of central bankers is that they can call the tune on inflation…By clearly stating that they will not react with tighter policy even as the prevailing inflation rate rises up to and beyond their target level, the Fed has broken with the last 40 years of US central banking tradition.” The world is watching for, and expecting inflation. We shall see.
Coastal areas of Miss and AL may get 15″ of rain, while cotton areas in AL are forecast to get 4″ to 6″. Most of AL’s cotton is produced in the Black Belt, and there will be some yield and quality losses. GA, FL, SC, NC and VA are forecast 2″ to 4″. The Delta gets nothing.
All of the row crops have reached levels that are not in sync with current carryouts, and are fundamentally over-valued. Wheat and cotton may be the most, then corn, then soy. With the approach of peak harvest, a mild tropical storm will not be enough to support cotton +66c. The balance sheet will have to get much tighter to keep cotton in the mid 60s.
Technicals
A negative seasonal begins on avg date 9/17. That would be about the time that Sally would be dead center over the Black Belt, so perhaps there will be a fundamental catalyst to identify the beginning of this seasonal. The Dec and Mar have an interesting top pattern, shown by 5 distinct points on the chart. Point 3 must be higher than 1, and point 5 must be higher than 3. Point 4 must be lower than 2. So far, so good. The sell trigger is the day Dec closes below the low of point 4.
