Weekend weather forecast for W Tx shows 1/4" to 3/4" wide coverage, with some areas getting 1". This is a most welcome event, but the Llano Estacado needs maybe one of these every 2 weeks for a few months to get moisture levels off the drought indicator.
Employment numbers were flat, some see this as evidence that the bounce-back in the economy is over. There was an article in the WSJ, 4 Jan, page A15, that discussed China's plans to eventually dominate the world economy, taking the US place. One paragraph alluded to some signs that China is slowing its purchases of treasuries. Stats compiled by the UST Dept show China's direct holdings of US gov debt has declined in each of the last 5 months. We note that the 10 year treasury is at the lowest level since Mar, and yield has reached +1%. A rising yield would support the $.
One intellectual cotton trader (no, thats not an oxymoron), put forth a theory that as China eases back on US treasuries, they buy a few commodities, among other things. Their ownership of treasuries, foreign exchange reserves and other pools of capital dwarf the commodity markets.
More and more focus on new crop. For the last 8 years, here is the avg that Dec traded during winter decision time, mid Dec to mid Feb: 12/13 = 80c; 13/14 = 77c; 14/15 = 64c; 15/16 = 62c; 16/17 = 72c; 17/18 = 74c; 18/19 = 74c; 19/20 = 71c; 20/21 = 75c. The high/low is 80c/62c, and the avg of the averages is 72c. This year so far represents a gain of +4c over year ago, and is +3c vs the 8 year avg. We will next apply same prices for corn and soy, and see how these 3 variables affected acreage in each year. A great effort will be spent in this office to get a good estimate on new crop acres, but what matters most is all of those acres on the Llano Estacado that are in drought. Do they return, or not?
The dollar has put in at the least a minor low. The weekly chart is convincing for an intermediate low. The seasonal occurred on time, and the 15 year seasonal history is + to mid Feb. It is interesting that the $ topped at the Nov election, and bottomed at the Georgia election this week. Assuming a 5 wave pattern is now complete, and that COT positions indicate a heavy spec short, a correction appears to be underway. If this does take place, there is high inverse correlation with cotton and other markets, so traders should watch for further appreciation in the $ to undermine support for cotton.