Varner Bros – The Cotton Row Journal

agricultural, Charts, Commentary, News, Technical Analysis

Flat Specs

TS 16, or Nester, did get the SE crop wet, but rainfall was not nearly as heavy as forecast. One service predicted 3″ to 6″ on the FL and GA crops, but reality was closer to 1/2″ to 1.5″. SC averaged 2″, while VA and NC got 1/2″ to 1″. This event was an irritant, not a big problem. The Delta states got rain today, but with +75% of the crop harvested, this will give merchants more of a smorgasbord in quality to choose from.

The COT report showed specs basically flat, perched between records of 140k long and -40k short. The market has ample room to move either way. Sugar was the only market near an extreme, with 160k short vs a record of 180.

Varner View

The near term rally has been greatly assisted by a turn in the $ of 2%. The dollar peaked in early Oct, and cotton did same with a minor low. But cotton has been much more closely in sync with grains in recent weeks, than the $. Row crops roughly bottomed together in late Aug and have moved in staggered steps higher. Wheat is up 19%, corn 14%, and soy 11%. Cotton is marching along +16.6%, low to high. Regards the spread seasonal mentioned below, a caution is advised due to the near 0 level of certs, and the flat position of specs. Normally, specs would be long and certs would be rising into notice. Not this year, not yet anyway. But we do like short side of market overall.


One tech service sees the Aug low as major, and a current target of 6940. Another calls for a pullback to 6050, then a thrust to 6750, perhaps 7400. A spread seasonal begins today, buy CTH/CTZ, exit date 11/05. This seasonal has worked 15 of 15 years, pretty reliable. We recommended this spread entry at -30, but the high tick in the last month has been -40. It is at -75 today. Full carry is near -300.

Varner Brothers
325 Cotton Row Cleveland MS 38732


(662) 846-6636

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