No Splash Its rare when notice period takes a back seat to anything, but thats just how the Mar 21 notice has turned out. A piddling 18 notices were issued by Term, with certs right at 100k. The other rarity is that carry from Mar to May went to 88%, in a spectacular bull market. Normally, a 90c raging bull would have meant a huge invert, but not this time. This market has partial carry to July, then it goes invert by +6c. Its a strange package of spreads.
One newsletter says old crop carryout is as low as 3.5 Mb, while new crop could be 2.3 Mb. Anticipation of such a low carryout can drive price as much as reality. This happened in the 15/16 year when the market was deathly afraid of the destocking program China announced. Even though carryout was in a very tight range of 3.0 to 3.6 Mb, price ranged from 66c to 56c as the start of destocking approached.
It is anticipation of a consumer surge accompanied by raging inflation that is driving our market now. The 10 year yield rose to 1.35% today, highest level in a year. Next target is the 2016 low at 1.41%. The 10 year has been in a 40 year bull market in value, and a 40 year decrease in yield. That's one long bull ride.
We tried backing into some hard numbers from the OF world supply/demand, and came up with total harvested acres of 82.037 M, a yield of 698 #/a, and production of 119.3 Mb. Yield is pretty much an average of the last dozen years, excluding the disaster year of 15/16 of 609 #/a. Planted acreage of 82 M is right at 18/19, and between the high/low of 89.2/73.3 M. The gain of 2.3 M acres worldwide partially accounts for a market gain year to year of almost 9c on annual averages. The price of cotton through winter, and the gain in price year to year, has put cotton at a very competitive level vs corn and soy worldwide.
Historically the mid 90s has been an area of several major tops. They are: 9650 in June 2018; 9735 in Mar 2014; 9445 in May 1991; 9390 in July 1990; 9693 in Dec 1980; 9696 in Sep 1980. A weekly Fib count is close by, 1 Mar is 144 from the major high of June 2018. All Fib counts have marked minor events so far, nothing major. March contains 2 long term Fib counts from major lows, and a year ago cotton bottomed late Mar/early Apr.