Top Crop Opens

Here is an arcane economic stat that bears a look unemployment claims were reported at 206k, lowest level in 50 years. Household income is now an avg of $61.4k, a record. These are mentioned as the one key ingredient for inflation to survive is wage pressure. Keep one eye on gold, et al.

We did a quick turnaround look at crops in nw MS, w TN and e central Ark. The surprise was to see harvest so advanced. Perhaps 1/3 of the fields were picked, with modules scattered all over. Of about 50 fields seen, only 3-4 remained non-defoliated. The fields that sported the chest-high cotton had a few top bolls that did not open. The fields with cotton waist-high showed bolls open top to bottom. It is a magnificent looking crop. Very early yields in the south Delta were below expectations, with suggestions of many cracked bolls that did not open. We have yet to witness this.

The blob of warm, moist air will mean more rain into early Wed morn, then it will move east to irritate planters in the SE. Forecasts called for 4-5 of rain total in the Delta, but amounts so far are 1 north of Clarksdale, and less south of there.

Varner View

There have been a lot of highs in the month of Sep, some due to hurricanes and others due to razor thin carryins. The carryin this year is small, but not too tight. The US has been shipping an avg of 118kb/wk in the first 7 weeks, and using 68kb/wk, for a total of 186kb/wk. The drop in shipments from +250kb means that if this keeps up, the carryin can supply 23 weeks into this year. Mid Jan. If the shipment rate of spring to July had kept up, the carryin empties out in 13 weeks, or about end of Oct. There are 3 Mb waiting to be shipped and used in the US of carryin. There is no shortage of supply, even if the crop gets a little delayed by rain.

Technicals

Re the CRB, seasonal history indicates a low due end of Oct, and another in early Dec after a slide from late Aug. The CRB day chart bottomed in mid Aug, and has gained 7.4% into this week. This index is 40% composed of energy, so ag and row crops do not hold the power. Brent crude broke above $80 today, and that uptrend is intact for a potential test of the spike low at $88.50 in June 2012. However, the other components are expected to drift downward to typical fall lows.



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