Well, FridayΆs closing remarks proved way too pessimistic. Despite the firmer close Friday, cotton was still down for the week and I showed a chart suggesting the selling would resume and not bottom this market until we see a 62% Fibonacci retracement of the 1100 point move higher since January. That meant further weakness to the 82.20 mark.
But that was not going to happen today with corn, beans and wheat all making double-digit moonshots on planting delays in corn and spring wheat, freeze and drought damage showing up even more in winter wheat for further declines in crop condition.
Notice that unlike corn and wheat, which both punched through important overhead resistance, COTTON DID NOT, DESPITE TODAYΆS STRONG CLOSE. The downtrend line is still intact, although now itΆs only about 30 points away.
And itΆs not entirely certain todayΆs planting progress report will be enough to punch cotton futures through that resistance unless again clinging to the coattails of followthrough buying in corn, wheat and soybeans tomorrow.
Yes, planting is behind. Only 14% is planted vs. a 5-yr average of 20% an last yearΆs 25%. But thatΆs just 6 point gap, nowhere near the gap we report in todayΆs comments for corn and spring wheat. Nonetheless, the “trend” in the gap is widening. Last weekΆs gap was just 4 points (10% planted vs. a 5-year average of 14%).
Further, thereΆs much-needed rain in the forecast for parts of Texas that badly need it. The trouble is, most of those showers are forecast for the region just north of prime Texas cotton country. No change in advice. Just continue to hold off on “catch up” sales as described below. LetΆs wait to see if Dec cotton can clear that downtrend line. If it canΆt, IΆll re-instate catch-up sales advice.