What? Me Worry?
In the above words of that famous American, Alfred E. Neuman, we are at a loss to know if we should be worried about The Donald, and The Corona. Which one prevails, and which one tweets first? And what does it matter to our market? We can't imagine how testy the White House will be in the next 10 days, with a locked in Trump who can't get out to his road shows.
Weather is perfect for harvest across most of Dixie, but there is a low pressure system that could put some rain on the north Delta on Sunday night into Monday. It then dissipates.
Only 20 notices have been put out on the Oct, a puny number. But this nearly matches the equally puny certs, at 15 kb. This low level of certs, and a late harvest, combine to keep Dec supported.
Informa released an estimate of 16.35 Mb (includes pima), down 710 kb from the USDA estimate in Sep. Our work shows a top side at 17.0 Mb and a low end at 16.5 Mb. If Informa is right, then total supply is 23.6 Mb, and 60% of that is 14.16 Mb for exports. Carryout is 6.93 Mb, the ratio is 41.6%.
Cotton rallied a bit from support at 6465, following the SP, metals, grains, et al. The 6465 level has been the low since 9/11, tested 5x and so far is holding. Looking ahead to the Oct SD reports, all of the grain markets will have lower end stocks, as will cotton. Chicago has gone through a wide-spread wipeout of stocks, while cotton has been bothered by pesky weather. The floor prices of all the row crops have been lifted. What has not changed much, yet, is that world balance sheets for cotton and wheat are extremely high. Wheat does have a drought threatening in Russia, the Ukraine, and Kazakstan, while cotton has already lost 3 Mb in the US due to TX drought, and Southern rains. Wheat and cotton have world balance sheets so burdensome it will likely be in the next crop year before they can be brought lower.
As this was written, Dec teased but held key short term support at 6465. Sell stops are building there. Momentum has turned down, again, while weekly chart mo appears to be beginning to roll over.
Regards the $, the Dec tested and held the 21 and 55 day avgs this week. The 21, 34, and 55 day avgs are clustered from 9328 to 9358. This area coincides with a near term support trend line coming off lows of 9/01 and 9/21. The low of early Sep was major, and honored a positive trend line off major lows in 2011 and 2014. This low also honored a cycle of lows made every three years, observed since 1993.