A Cloud On The Horizon

Weather Underground posted a 90% chance for rain in Lubbock of 0.65, on Friday. This is in between insignificant and bountiful, as we term as useless rain of , and perfect at 1.5. If Lubbock does get 0.65, our phrase is nice but more needed. The market saw this forecast and shrugged it off as doubtful. What makes things interesting is that the better chances for rain come after the market closes. Fun Friday.

The Cotton Association of India pegs the crop at 28.9 Mb, vs 28.5 by the USDA. But the big mystery is how farmers will react to the pink bollworm issue going into next year. They either pay up and get current Bt seed, or plant something else. The price of new crop cotton beats other alternatives, so our guess is that most decide to pay up.

Varner View

Looking at various new crop possibilities for grain markets, they argue for mostly higher prices in corn, static for wheat, and lower for soy. This mixed bag means there is no clear cut path forward, without considering weather. If normal weather does occur, we would not expect grain prices to fade away to fall lows until past the peak periods for yield maximum, which falls from late July into early Aug. Cotton is already into the first weather scare of the year, and one rain of 1/2 to 1 will still be insufficient to encourage most dryland farmers in 1N and 1S to plant. Corn, like cotton, has good domestic demand and high exports, and faces the lowest acreage in 8 years. This week shapes up as nothing through Wed, then excitement on Thur/Fri with sales and weather.


Seasonal history indicates 3 negative entries, on 4/05, 4/10 and 4/23. Exits and lows come in early May and early June. The long term 22 month cycle low is due next in June.

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

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