The ICAC numbers are out, and once again they show a mountain of difference in world end stocks between them and the USDA. We suspect they continue to count bales in Asia that the USDA has determined to be phantom. Production numbers for last year and this are very close, but the ICAC is showing basically a static situation in world use, at roughly 123ish Mb. USDA continues to see consumption gaining 3 Mb, or +2.4%. Since there is no A forecast, we cant play the usual game of building a price box. The last was 8645, which implied a futures price box of 9045/7045. In other words, both high and low is in place.
Even though ICAC pricing model indicates futures have made both high and low for the year, we think they may be wrong about the low end. If we dont get a surprise on Friday, of which there is much anticipation of a bullish surprise, then there is a good chance the 7000 recent low and support gets pierced. Demand has been sublime to neutral this year, and there could be a tsunami of a world crop coming in new crop if Mother Nature doesnt hit us again.
From Toth, RJO tech analyst. These issues considered, a bearish policy remains advised for long-term players with a recovery above 74.85 required to pare bearish exposure to more conservative levels and commensurately larger-degree strength above key former support-turned-resistance at 77.20 to jettison the position altogether. Shorter-term traders are advised to return to a bearish policy and first approach recovery attempts to the 74.00-area ON as corrective selling opportunities with a recovery above 74.85 negating this count.
As always, please use protective buy and sell stops when trading futures and options.
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