A Day in History
Our father started in this business in 1949, and in the early 50s he got married, had kids, and bought the office we occupy today. He was then an agent for Reinhart Company, and there are still paraphernalia, stationery, sample tags, etc, lying around that carry that famous name. We found a scrap of paper in Dad's desk last week, that had the opening calls written down for cotton on 24 Sep 1973. Oct at 99.00; Dec at 90.75; Mar at 86.30; May at 83.90; July at 79.00; Oct 74 at 66.50; Dec 74 at 60.50; Mar 75 at 58.50. That was the highwater mark between 1863 and 1995.
The Delta is roughly 88% open bolls, and the southeast is about 70%. All of this has gotten wet 3-4 times in the last 3 weeks, but as of tomorrow, the forecast is finally clear as a bell. Give the farmers a couple of dry weeks in Oct, and it all comes out.
The $ is sharply weaker, some traders surmise it has anguish over the debates. One story out on the Dow Jones wire says the $ has become the favorite carry trade vehicle, as investors borrow $s due to low rates, and buy whatever. This all works as long as the $ stays down. It has lost 12% since Mar, and is a primary catalyst behind the broad commodity rally.
Cotton and other row crops were lower today, in spite of a lower $. One good weather forecast trumps the buck. Chicago markets have the stocks report tomorrow at 11, and surprises in that may have coattail pull on cotton. We expect spreads to begin to widen out, as harvest progresses, and have been eyeballing the Dec/Mar as a potential trade. It reached -60 yesterday, and we think this could trade -130 in coming weeks. Cert stocks remain extremely low, but have begun to trickle in, now at 14.5kb.
A few sell stops exist at 6465, low of the last 2.5 weeks. More lie at 6340, low since 8/20. The 34 day avg (6487) was being pressed as this was written (1130), and next support is the 55 day at 6400. Channel support is 6325, and rises 8 ticks/day. This channel has been in effect since late Mar, and has been tested 4x.