Sherman still stands out as historys worst disaster in Georgia, but Michael did some dirty work too. And poor FL saw 1/3 of its crop as abandoned and written off. Scanning through the USDAs US production numbers, we did some pretty good work and were only off by 240 kb. The other analysts were all above, or much above todays number of 18.41 Mb. This figure is 1 Mb above Informas July estimate, and about 1.5 Mb below our Sep estimate. Fair enough, this crop is a mid 18 Mb item. As for exports this is where we expect the USDA will have to do some serious crawfishing. This has been as high as 15.7 Mb, but some analytical methods are indicating something is the 13s. Our figure is 14.8 Mb today, and that is coming south.
As for world numbers, the Indian crop was docked for 700 kb as expected, and not much else..other than that 1 Mb cut in world use. Overall observation is that this report was pretty much as expected. Now back to weather and worry.
The kneejerk reaction to a 4.3 Mb carryout was a quick ride to run stops, and that was that. We are sticking with our end stocks figure of 4.6 Mb, and that is likely to inch up as exports prove not up to speed. Dec has kept within its price box of the last 2 months, but todays action has to be disappointing for a bull. If you sold Mar +8100, good trick. We also like selling into Red Dec.
As mentioned in these pages yesterday, cotton is infamous for head-fakes, stop running, false breakouts and any number of chart busting techniques. Today was textbook as Mar took out the trendline at 8125, ran all the stops, then settled back to unchanged.
As always, please use protective buy and sell stops when trading futures and options.
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