We were bearish of Dec 19 when it was trading +80c, and got much more so when it rallied from 72c to 77c. Now at 62c, we don’t see a fair risk/reward on the bearish side. Its also difficult to find a catalyst for a rally, and we find ourselves in a neutral, boring place. Even worse, we exited some shorts near 68c, and booted the rest at 65c. It may hurt more not making money on a good call, rather than losing.
Catalysts for that elusive short covering rally are 1) a dollar drop 2) a trade deal 3) W TX weather 4) Indian weather. The only one of the four is the stuttering monsoon in India, and we have already begun whittling away at yield. The current situation is estimated at a 1.5 Mb reduction from 29.0 Mb, and this cut is not seen worthy of even a small rally by the market. Something else has to materialize to make the record short spec nervous.
Sales were pretty good at 49 krb old, and 224 new. Viet was high, buying 135 krb both years. India bought 34 krb new. Shipments were common at 322 krb, steady as she goes. Combined crop year sales were 273 krb, best in 7 weeks. New crop sales were best in 8 weeks, and 2nd best in that market year. Final shipments won’t make the target. Chicago markets are of no help to cotton, as they appear to be in a liquidating mode after a run due to prevent and failed acres. Wish we were still short, but we took profits on a full house, rather than run the table.
No bottom, no reversal, no nothing. The only other nearby target is the twice made low at 6025 on the spot contract. Spot Oct is sub 61c, so this level may be tested the 3rd time. Regards the $, it has maintained a tight sideways trade since mid Oct,
As always, please use protective buy and sell stops when trading futures and options.
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