Our latest crop production is 15.9 Mb, with exports at 15.00 Mb, end stocks at 5.65 Mb, and a ratio of 32%. We are a little more confident on exports than production. The 15.0 Mb level is a 65% ratio of total supply. A ratio of 60% arrives at exports of 13.9 Mb. Right now demand is pretty good, so we choose the higher ratio.
After a redundant TX drought, and 6 tropical storms and fronts since early Sep, the crop has backslided about 4 Mb from where our estimate was in May/June. The USDA was at 19.5 Mb, our figure was 20.0 Mb. One has to wonder where price would be today if Mother Nature had not been so cruel. From Oct to Nov, production can and has changed drastically, but history indicates a figure more than +/- 1.3 Mb is a rarity. Either way. Odds are better for a big change, plus or minus, in Nov than not.
Below web address contains a good article on the history of textiles, from the WSJ, Sat, 24 Oct, page C4. If you can't pull this up, send us an email and we will forward. A couple of great books on cotton's history, "Cotton and Race and the Making of America," by home-boy Gene Dattel, and "Big Cotton," by Stephen Yafa.
This was another of those many "macro" days when markets ride up or down together. Forget the balance sheet, just go with money flow. This market is in correction now, but a correction is usually messy and choppy. We stand behind a recommendation to sell quick rallies. Regards the GDP in Q3 of +33%, it was very impressive even though it was compared to Q2, a record dismal period. This rebound, plus that of China and some others, would be reason to project a pretty good 2021. But large parts of the world economy are diving back into total lockdowns and economic pain, after teasing business owners that the worst is behind us. Evidence of lockdowns doing anything to fight the virus is negligible, but politicians love to use levers of power to show they are "doing something." Lockdowns are a huge deterrent to the consumer to buy textiles.
From Dave Toth, RJO analyst: What the market has done is reject a legitimate and objective high risk parameter at 7260 and produce enough threats against the bull to question the risk/reward merits of maintaining a bullish policy. We will be watchful for proof of 3 wave corrective behavior on a subsequent recovery attempt in the days ahead to reinforce this reversal count and produce a risk/reward opportunity from the bear side that could be extraordinary.