'The Past is not Dead'
Sales were very good at 257 krb, in spite of prices being $35/b above those just 3 weeks ago. Pak was high at 97 krb, and China was 2nd. New crop sales were 21 krb, China picking up 17 of those. Shipments were ok at 202 krb. A pretty good week, considering the price ascent. The US must avg 277 krb/week in shipments to make the target. Combined sales of 279 krb were best in 5 weeks.
Chicago markets were all higher today, with consistently hot sales figures in corn and soy. Cotton dutifully followed, and continues to test key long term resistance at 72c.
Good rains fell in NSW, Aust, but nothing for Q. Planting is beginning and reservoir levels are better now than year ago. Last year Aust got hammered with a production of only 630 kb, and this year is expected to make 2.1 Mb. There remains much confusion on cotton sales into China.
Looking at our chart of cumulative sales, if this year ends up at the same relative place it is now, a 4th place finish projects a 16.1 Mrb sales (16.55 Mb 480#). This is 1.95 Mb above the current projection for shipments, so one must try to estimate the "roll" in order to make a reasonable estimate. This has changed dramatically in recent years, with the US rolling over 1.5 Mb to as high as 3.0 Mb. Because of this figure being so prone for error early in the market year, we are leaving this beast alone for now, and are sticking with the tried and true method of a simple ratio of total supply to guess shipments. We are standing aside spec trades for now, awaiting next week.
Spreads in this market are known for leading futures more than not, but during this bull market spreads have shown little leadership. The leading Z/H has finally lifted itself from -100 to -50, taking 6 weeks to claw upward 50 ticks. The rattlesnake N/Z has maintained a premium range of +110 to +260 since mid April. It is probing resistance via a trend line across 3 previous highs, near +250. We expect these spreads to more or less trend with futures, and in that regard we are interested in key timing events next week. If a top pattern, or high volume spike occurs in futures, traders may want to probe spreads from the bear side.