Sales were rather good again, at a meager 560 krb. China bought their usual third to half of the total at 177 krb. Exports were very good at 283 krb, about 40 krb above the needed average. All the talk today was about why cotton refuses to react to such hot demand, and we have the same answers everyone else does. Outside markets continue going down, and it is the market’s duty to discourage new crop acreage. Since this is the middle of crop decision time, the price of cotton is doing an outstanding job of pushing planters away.
Rain is forecast for Texas Friday, with moderate (1/2”) amounts for 1-S and 6. Lesser (1/4”) amounts will fall on 1-N, 2-N, 2-S and 7. Saturday forecast calls for moderate rain on 1-S, 2-N, 2-S and 7. ¼” for 1-N, 3, 4, 6, 8N and 10N.
Varner View
Its easy to become more and more bullish on cotton, but in this business timing is often more important than getting the price right. When looking around to find reasons other than outside markets as the cause of cotton’s lackluster action, this weekend’s Texas rain is a negative force. Texas is slowly removing itself from the extreme drought column. If one uses trend yields for Texas rather than the average of the last 4 years, then one can add 1.5 Mb, maybe 2 Mb to production. Keep the powder dry, we want to keep trying to find a nice and easy long trade.
Technicals
Open interest eased over 216k today, the highest level since the record bull market of 10/11.Most of the rising open interest since late December has come from added spec shorts. OI then was 175k, so some 40k of new shorts has been added. Price action in late Dec has seen a drop in Mar from 6283 to 5705, and spot is now back to roughly the halfway point. Total OI warns of a short cover at current level.