Monday softs
7 responses | 0 likes
Started by tjc - Nov. 5, 2018, 12:06 p.m.

  Good morning, MarketForum

  NO guarantee, but one might want to buy a kc, sb, and/or ct call today.

  Do your due diligence, observe expiration dates and good luck

Comments
By WxFollower - Nov. 5, 2018, 1:10 p.m.
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 Considering the neutral dollar and stock markets overall today, CT looks pretty weak to have reversed the better part of one cent from moderate gains. The pattern the last 3 days, however, has been for buying very late in each session. Will that repeat today??

 Today should be the final weekly CT crop condition report. That may have an influence on tomorrow. I expect little change but will be especially watching TX, which has been declining in recent weeks due to the quite soggy/cool October combined with the windy early freeze event of midmonth, and GA, which has had slight improvements the last 2 weeks. For the US as a whole after the big downturn 3 weeks ago, the subsequent 2 weeks were net slight further downturns thanks largely to TX.

 Next will be THU AM’s important weekly export sales and the very important monthly USDA production/WASDE reports.


Edit: Of course, there are also the elections. I assume the GOP retaining the Senate and the Dems taking the House is what is baked in fwiw.

By WxFollower - Nov. 5, 2018, 4:55 p.m.
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Wow, overall US CT got even worse yet again! So, after the big drop of 3 weeks ago, the subsequent 3 weeks have dropped further. GA actually dropped back some as it gave back about half of the slight gains it had the last 2 weeks. TX continued to drop with its VP up still another 2 and its G/E down another 4. 


 Remember that comparison I did about the -16 net change in G/E less P/VP for Oct 2018 vs other Octobers going back to 1990 and this -16 being far worse than any other October with -10 next worse? Well, now the full month is in and the change has risen to -19! And just looking at the change in E less VP is even more notable with it, alone, now being a whopping -16! Second worse is way under that at -4! So, -19/-16 for Oct 2018 compares to the 2nd worst, the -10/-4 of 2009. There was a drop of 4% in the Nov production report.

"11/05 03:09p CST  DJ USDA Crop Progress: Cotton Condition Index-Nov 5

    Dow Jones compiles this national summary of relative crop  
conditions and index to assess changes through the crop season.  
The summary and index are calculated from the USDA crop condition  
reports and weighted by state crop area.  
(*) denotes data for the same period the previous year.  
TOTAL U.S. COTTON CONDITION SUMMARY (IN PCT):                 Yr Ago(*)  
in pct  11/04 10/28 10/21 10/14 10/07 09/30 09/23 09/16 09/09 11/05/17  
v poor     19    18    13    11     6     6     7     8    13     NA  
poor       16    16    20    20    19    19    22    24    21     NA  
fair       32    31    33    34    33    33    32    29    28     NA  
good       26    27    26    29    32    32    29    30    29     NA  
exlnt       7     8     8     6    10    10    10     9     9     NA  
 
STATE INDEXES AND NATIONAL AVERAGE RATINGS:  
(An index value of 100 is approximately normal.)              Yr Ago(*)  
         11/04 10/28 10/21 10/14 10/07 09/30 09/23 09/16 09/0911/05/17  
Ala       100    95   100   100   110   109   110   109   112     NA  
Ariz       97    98   101   100    99   100    99    97    99     NA  
Ark       113   113   113   113   114   113   114   113   116     NA  
Calif     110   110   110   110   110   128   128   128   128     NA  
Ga         71    73    71    69   100   101   101   102   101     NA  
Kans      100   100   100   104   107   107   109   106   105     NA  
La        102   102   102   102   102   104   104   102   100     NA  
Miss      106   106   106   106   106   107   106   109   108     NA  
Mo        101   101   101   101   101   103   102    98    98     NA  
NC         91    90    84    85    86    86    83    92    99     NA  
Okla       88    89    85    87    86    88    89    87    80     NA  
SC         99   101   100    99   101   101    97    99   102     NA  
Tenn       98   100   104   104   106   106   109   108   110     NA  
Texas      73    76    79    80    82    82    78    76    72     NA  
Va        102   101   103   102   105   100   102   106   108     NA  
15-state  
avg        82    83    84    85    90
    90    88    87    85     NA  
Yr ago     97    97    98    99    99    97    99   100   101    NA"

-------------------------------------------------------------------------------------------


Look at the struggles in TX to harvest over the last 2 weeks:


Week ending 10/21: 35% done vs 26% 5 year average...so way ahead

Week ending 10/28: 36% done vs 33% 5 year average....so only 1% done that week vs average of 7% for that week

Week ending 11/4:  38% done vs 40% 5 year average.....so only 2% done that week vs average of 7% for that week and now behind average.



By metmike - Nov. 6, 2018, 12:56 p.m.
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Thanks again Larry for that  comprehensive report on cotton conditions from the USDA yesterday. Here's a link to that report:

http://usda.mannlib.cornell.edu/usda/current/CropProg/CropProg-11-05-2018.txt


Despite the deterioration, cotton is getting walloped today.  Down 2c at one point. Recent lows of 76.14 from 2 weeks ago and for October are still holding. A slight deterioration at this point, after being bombarded with record deterioration last month, obviously means zilch. 


The Sept low was 75.37. Between here and that price looks like good technical support but I am only watching cotton,. not trading it like tjc.

Considering the massive........record losses to the crop production/supplies over the last month, cotton has acted horrible but I'm not a cotton expert. 

I was considering a tiny long position ahead of the USDA crop report on Thursday but realize that major cotton traders all have to know everything that we know because the news has been out there for weeks. 

What if the USDA does one of its surprises and decides not to cut the production as much as the market expects based on crop conditions?

With the wimpy move up on monumentally bullish supply news, something like that, less bullish than expected news, could spell out the breaking of huge support below on the release of the news and quickly hitting limit down.

My guess is that the report will actually be bullish, however all traders should always think about all the risks before each trade, then objectively dial that into a trading plan..........which includes passing up some trades that have unacceptable risks. 


By metmike - Nov. 6, 2018, 12:59 p.m.
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By WxFollower - Nov. 6, 2018, 1:40 p.m.
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 You’re welcome, Mike.

 Cotton is, indeed, sharply down today although it has bounced back 1/3 of its losses as I type this. I’m not sure of the main reason it is down so much considering that equities are up nicely and the dollar is near unchanged though one source, DTN, mentioned “election jitters”. I’m guessing it is down partially on the lack of positive developments in the China/US trade war.

 Also from DTN, I just saw this:

  “Looking ahead, on Thursday the USDA will publish its supply and demand numbers for November. Industry analysts suggests a crop of 19.2 million bales (a range of 18.65 million to 19.75 million bales) down from October’s number of 19.76 million bales.”


 This is the first time I’ve seen the results of an industry survey. So, the mean guess is for only a drop of 550K bales or just under 3%. Perhaps this is lower than what many had earlier thought and is, therefore, a significant factor in today’s price drop?? This would be under the minimum drop of 4% that I’ve mentioned. I’ve also already mentioned that tieing or even exceeding the record 6% Oct to Nov drop is quite doable based on the huge GA/AL/FL loss from Michael as well as big losses from the wet/damp/cool Oct in TX/OK/KS/AZ as well as a windy freeze in a good portion of NW TX in mid October.


 My minimum 4% drop projection was strongly supported by what at the time was an Ocober change in G/E less P/VP ratings of a whopping -16, which is well above the next largest drop on record of 2009’s -10. Since then, another week of worsening ratings came out yesterday, which completes the period that the USDA will be considering. Now that change, the full month change, comes out to -19, which is nearly double the -10 of 2009! 2009’s Nov report dropped the US crop 4%.


 If I just looked at change in E less VP, the comparison is even more dramatic: an easy record -16 for Oct of 2018 vs the next highest -4 of 2009!


 In summary, the full month comparison is -19/-16 vs 2009’s -10/-4. When considering that 2009’s Nov USDA report reduced the US crop by 4% and also knowing what I’ve read about GA/AL/FL damage as well as what I can best tell about TX/OK/KS/AZ losses based on past cool/wet Octs, I find it even harder to believe that the 2018 Nov USDA drop won’t be at the very, very least 4%. I’m saying this fully realizing I could end up with a major bust since nothing’s nearly certain with reports like this. So, any trader that decides to trade based off of an anticipated bullish USDA report needs to use extreme caution, of course. Options may be the best choice to minimize risk while still allowing for a decent shot at gains.

—————————————

Edit: Mike said this: “I was considering a tiny long position ahead of the USDA crop report on Thursday but realize that major cotton traders all have to know everything that we know because the news has been out there for weeks.”

Mike, 

  I’d also think so but just who have been the major traders? What if most are purely technically based and thus ignoring fundamentals? Or what if many are focusing only on slower export demand and are ignoring the supply side? Or what if a large portion of traders are not even in the US? If true, then many may be clueless about the US supply situation. Government reports come out with surprises, sometimes big, from time to time as we know. What if the “major cotton traders” who supposedly “know everything” are but a small portion of volume and therefore not having much effect right now? I've noticed this market has been very disjointed the last 5 days with sellers dominating early and buyers late. What's the deal with that? 

 

 

By WxFollower - Nov. 6, 2018, 8:05 p.m.
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"(Bloomberg) — The following table shows results of a Bloomberg                  News survey
             
                  of as many as eight analysts for the USDA’s World                  Agricultural Supply and Demand
             
                  report on the 2018-19 cotton crop, which is scheduled                  for release at noon in
             
                  Washington on Nov. 8. Figures are in millions of                bales.
              ================================================================
                              |——–Survey Results———|USDA
                              2018-19:| Avg | Low | High | Oct.
              ================================================================
                              US Production | 19.21| 18.65| 19.75| 19.76
                              US Exports | 15.25| 14.80| 15.50| 15.50
                              US End Stocks | 4.62| 4.15| 5.10| 5.00
                              World Production | 120.82| 120.00| 121.50| 121.66
                              World Consumption | 127.45| 127.00| 128.00| 127.76
                              World End Stocks | 74.16| 72.85| 75.00| 74.45
              ================================================================================
                              Analyst |————U.S.————| World
                              | | | End
                              Estimates: |Production |Exports |Stocks |Production                |Consumption |Stocks
              ================================================================================
                              Cottonexperts.com | 19.46| 15.00| 5.10| 120.66|                127.00| 74.00
                              Doane | 19.00| 15.50| 4.15| 121.00| 128.00|                74.00
                              Love Consulting | 19.20| 15.50| 4.60| 121.30|                128.00| 74.50
                              Price Futures Group| 19.55| 15.50| 4.75|n/a |n/a                |n/a
                              Rabobank | 19.30| 15.20| 4.84| 121.00| 127.40|                74.20
                              Rose Commodity | | | | | |
                              Group | 18.75| 15.00| 4.20| 120.25| 127.25|                74.55
                              Varner Bros. | 18.65| 14.80| 4.59| 120.00|                127.00| 72.85
                              Wedbush Securities | 19.75| 15.50| 4.70| 121.50|                127.50| 75.00
                              —————————–====================——————————
                              Copyright (c) 2018, Bloomberg, L. P."


 I highlighted the US production guesses. The average is 19.21. I'm expecting Rose and Varner to be closest. I was told to ignore Wedbush's 19.75 because they don't even have expert analysts on CT. They has the same number last month.  So, if you take out that guess, the average is down to 19.13 MB instead of 19.21. The average guess may be high partially because several analysts may be too gun-shy to predict a large drop due to most being too low last month.

 Speaking of last month and when ignoring Wedbush, Varner was closest with their almost perfect 19.75 guess and Doane was a very close 2nd with their 19.80. They are 2 of the 3 lowest for this month's guesses. Love was the furthest away last month.

By tjc - Nov. 7, 2018, 9:41 a.m.
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  Tuesday CT trades China Trade War fears;  today (Wednesday) CT 'appears' to trade Larry's production (supply) numbers.

  Glad I have options!!