It Was the Third of June…
Another sleepy, dust, delta day. If you are under 50, you probably will have to go to Youtube to hear Bobbie Gentry’s ‘Ode to Billie Joe,’ a great ballad made in the Delta, 1967. All real cotton traders know this song. Roberta Lee Streeter was born in Greenwood and grew up in Tippo.
COT reports show cotton remains a little too short, and demand has been good to very good, and price is today 10c to 12c below where it was in early spring. We are not sure how far cotton can rally, but there are 2 fundamental events close by that could put in some sort of minor high. The USDA report is on the 11th, and options expire on the 14th, so maybe we can get lucky and call or recognized a high around those.
A drive through the central part of the Mississippi Delta showed all crops to be in very good condition and stands. There were fields not planted and we assume most will be planted with soy. There are trouble spots for cotton in the world, but the US only has some minor irritations now, no real trouble. Dry conditions persist in Aust, and India seems to have a perpetual late monsoon. The July/Dec spread is acting like a little bull, rising from -100 to +135, and it could easily climb for more. Open interest is beginning to peel away from July, but in orderly fashion. Overall OI is a little low at 217k, and this has not changed much since Dec expired. Our hope and plan is to watch for a rally into mid June, and find another short.
A minor low appears to have been put into place today at 6690 July and 6594 Dec. This point may be a minor b down, of an a-b-c correction in wave 4. Seasonals are + into late next week. If this chart pattern is correct, an equal leg measures July to 7221, which is right at the Feb low and a 50% retrace from the April high. Dec measures to 6929, right at a small gap made on 5/13. Chart below shows July/Dec spread. Resistance lies at trend line at +200, and there are two old tops around +300.
As always, please use protective buy and sell stops when trading futures and options.
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