The $ sank, and most of the Board today was higher, on better odds for another stimulus blowout. This one is said to be between $1.5T and $2.5T. Politicians love to spend money in front of an election, so expect this to pass.
Yet another tropical storm has formed, and for now is predicted to be over the Black Belt on Sat. A lot of cotton will be harvested by then, so the rush is on. A USDA report is on Friday, just in time to create excitement going into the weekend. Hold Tight.
We drove from the middle of the MS delta on Sat, crossed the River at Helena, then into Memphis. On Sun we drove home on Hwy 61, thus getting a view of about 250 miles of prime cotton areas. All rice and corn is out. Soy and cotton harvesting was ongoing till sunset, and will continue with urgency. We were surprised so much cotton was harvested, and sitting in dozens of modules around fields. The ground was evidently dry enough on Thur to allow pickers in. Also surprising was that there were no sightings of "string-outs" or cotton on the ground, in spite of 4 storms and fronts in a month. There were no fields left to be defoliated, and ample fields are awaiting harvest. By this weekend, much of the cotton in MS and nearby states will be picked.
The market is trying to price in a lower crop, and another irritating storm next weekend. It has reached the upper boundary of resistance, helped in part by a lower $. Spec shorts should implement reasonable stop-loss protection, if this rally continues. Regards the report, production is seen in a range of 16.5 to 16.75 Mb, call it 16.65 Mb. This is down 350 kb from the Sep report, and is about half the loss as seen by Informa. Exports are dropped to 14.34 Mb, in line with 60% of total supply. Carryout is lowered to 7.05 Mb, and the ratio remains at ~41%. This is not a balance sheet to buy at 67c, but market momentum and money flow is +.
Today falls on an 89 count from the minor low of 5/29. As this was written, this small rally was enough to trigger some buy stops at 6700, but it could not follow through. Cotton is notorious for false breakouts. There are two ongoing seasonals, one that is + from 10/02 to 10/26, the other is negative from 9/17 to 11/14. Pick your poison. COT report indicates spec and mang net longs are at about the 60% decile, which means ample room to add.