Varner Bros. – The Cotton Row Journal

agricultural, Commentary, News

Chicago Liquidation

Title does not refer to crime and murder in the Windy City, but to the exit of long positions in soy, corn and wheat.  Cotton won’t have such an event till mid Nov, but the grain markets have been brutal and efficient in cleaning out topwater longs.  

One weather service shows “iffy” rain for the Llano Estacado on 8/03 and 8/04, and hit-and-miss chances every day from 8/09 to 8/13.  W TX needs one good Aug rain to set this crop up for a bellringer.  If no rain by the Aug crop report, there will be some panic and serious worrying.  The Delta and SE are covered up with rain forecasts.

Varner View

Cotton Grower magazine held its weekly roundtable, and speakers saw a trading range of 65/55 for Dec. That may be fair for now, but where were these guys last April? We find the sentiment, and the spec position very lopsided now, even though we have long thought there was a good chance of sub 6000 prices in the fall, with an outside chance to go to loan equivalent (55c). This new company sure makes us uneasy about pressing the short side here.

Technicals

Support for Dec lies at 6285, not much else to say. Re the $, it is up 9 days in a row, or 2.7%. This strength is pressing ag markets, as it makes US exports more expensive in real terms. The $ reached its major 62% retrace from the 103.82 high to the 88.15 low at 9780 last Nov, and has continued to press against it. A breakout above 9800 would target the 2017 high, and put hard pressure on commodities.


As always, please use protective buy and sell stops when trading futures and options.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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