Tuesday Fun
7 day rainfall totals in sw GA show only 1/4″ amounts. They need more, but chances are very good into Wed. SC got what they needed, so the only dry spot is GA. Then there is India, with some chance of rain in next 6-9 days.
Getting ready for tomorrow’s report, the survey is pretty tight on production, with a cluster between 22.0 to 23.0 Mb. One loner is 20.5 Mb. Exports are clustered from 16.7 to 17.5 Mb, with one at 15.7 Mb. End stocks group from 6.4 Mb to 7.0 Mb, with one at 5.8 Mb. World numbers show more divergence, as our prod is 128.8 Mb compared to the low at 122.0 Mb. Consumption is tight from 125.0 Mb to 126.8 Mb. Let the show begin.
Chart shows Mississippi acreage has peaked around 650k in the last 13 years.
Varner View
COT numbers once again come close to the “extreme” net shorts for non commercial types, but one must view this figure with the fact that open interest at 210k is at its lowest in 2 years. By notice day OI may well drift towards 200k, same level as July notice 2017, and lowest since July 2016. Even though specs appear perched heavily on the short side, the gross level of spec shorts is low. So too is the level of farmer hedges. The farmer is trying to wait out the specs and get a good rally to sell into. This may happen, but some catalyst is needed to run some specs out. We are flat.
Technicals
Dec made a new low, but July did not. Our idea is that the new low for July is likely the final 5th, and that prices are near a minor or intermediate low. Same for Dec Cont, as this contract is at the lowest level since July 2016, and has held on 4 tests. The spot chart shows several lows in the mid 60s in the last 3 years. A long term trend line beginning at the low of 3670 in 2008, then crossing the 5566 low in Mar 2016, crosses this week near 6415.
As always, please use protective buy and sell stops when trading futures and options.
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