Much has been made of a possible ban by the Trump admin of finished textiles coming out of Xinjiang. This edict, if it does get in place, will be a futile effort of "whack a mole." No doubt China uses child and Uighur labor, but they also use 25% of imports to spin into finished textiles, so the US will find itself in a position of damaging its own export business. Some traders insist that origination of the finished textiles will become obscure and elusive, so as to avoid the ban.
The survey for the report showed not much dissent. US production avg is 16.74 Mb, compared to our estimate of 16.59 Mb. Exports are clustered tightly from 14.3 to 15.2 Mb, vs the Nov estimate of 14.6 Mb. End stocks avg is 6.9 Mb, down 300 kb. Consensus opinion is that the US production is a little lower than Nov, by 350 kb, and that will be the biggest change. Expectations for the Nov report were for a large cut in US production, but there were only small changes, up and down, in several states.
A cut of 350 kb in US production puts the carryout at 6.85 Mb, and the ratio at 40%. This assumes no change in exports. There is hardly a shift in "fair value," still at 60c, maybe 61c. There are about 41 "pinch points" at the 40% ratio with futures at or below 74c. They run as low as 42c. There are only 3 above 74c, all right at 80c. As for other comparisons, last year is close at 41.4%, as is 08/09 at 38.3%. Those years had high/lows at 72c/48c and 72c/37c. Then there are 00/01 and 01/02 both right at 40%. Those high/lows are scary, 68c/38c and 48c/28c. Those years were influenced by the highest level of the $ since the mid 80s, and the CRB half of what it trades today.
The spot chart rolls to Mar tomorrow, and gains about 2c. The trend line originating at the 4/01 low next crosses the low in Sep, then the low of 11/17, and lastly the low Fri. The trend line today crosses at 7000, so if Mar closes below that this week, it will break the 9 month positive trend.