Black Friday Sales
No matter how the in-store sales turn out today, cotton's lead batter hit a home run. Sales of 382 krb were 2nd best of the market year, and for the series going back to Aug 2019. Viet was high at 174 krb, Bang 2nd at 88, and China 3rd at 38. China bought 75 krb combined. New crop sales were 39 krb, nearly all China. As good as sales were, shipments slipped a little, falling to 205 krb, about 70 below the target avg. Sales have been around 300 krb the last 3 weeks.
Next week ushers in the month of December, and traders must begin to focus on how new crop stands up this December, compared to others in recent years. The avg price of futures during December in 2014 was 63c. For 2015 it was 62c; for 2016 = 71c; for 2017 = 72c; for 2018 = 76c; for 2019 = 69c. The Dec 2021 is 71c today, and very much in line with the previous 4 years. The price avg for Dec in 2014 and 2015 was a dime lower than the years following, and acreage responded, with plantings of 8.58 M and 10.07 M. The last 4 years ranged from 12.12 M to 13.74 M, and Rabo is out with a 12.5 M estimate for next year. Two dominant factors going into the acreage game next year will be the TX drought, and the soy price. The Mar 2022 cotton/soy ratio today is 0.69, a little low, compared to the range since 2013 from 0.53 to 0.11.
Our market has experienced several major intrusions by the US government in the last 50 years, but traders should take a look at how Japan buoys its stock market. The central bank has bought $400B of ETFs, and has a sweet profit of $55B to show for it. Easy money. Check out the Nikkei chart, it has shattered the old triple top at 240, and is up 17% just this month to 269. Heck, for only $6B, Uncle Sam could buy the entire US cotton crop, and sit on it for a few years, sending price to the moon. The $ dipped to a 31 month low today, and is threatening to punch through a support trend line that begins May 2011, next touching the low of May 2014, and finally crossing the low of 9173 in Aug. If this gives way, "pack up the babies, and grab the old ladies." It won't be difficult to figure out that commodities will have a friend.
This month is a Fib count of 144 from the major low of 3670 made in Nov 2008. This week is a 34 count on the Mar continuous chart, from this year's major low made on 3/30. Mar has reached the 50% retrace between the June 2018 to the Mar 2020 low, at 7307. A star formed this week, as there were only 20 ticks between open and close, after rising to a new high.