TodayΆs rebound should be seen as a good opportunity to execute yesterdayΆs further sales advice for 2013 production. It did not negate the negative outlook, both fundamentally and technically.

Hopefully by next week weΆll start getting government reports again on harvest progress. But we wonΆt have another crop report or supply/demand update now until Nov. 8th because USDA has decided to just skip the October report we should have received Oct. 11th.

We are reading such consistent reports of strong yields coming out of the Delta and Southeast that we are near certain USDA will be raising its crop estimate in the November report and raising ending stocks accordingly. (See the table in the FOCUS feature on cotton on p. 5.) Further, before weekly export sales reports were suspended, sales year to date were running behind the pace needed to sustain USDAΆs September estimate. If that continued the past two weeks and into the Nov. 8th WASDE, thereΆs a chance USDA may boost production AND cut its export estimate for a decidedly-bearish report.

Futures seem to be anticipating this, with the December contract breaking below key chart support after forming what technicians would now call a “bear flag” formation portending further downside risk to the 79 area. (We showed that chart in closing comments Wednesday.)

But specifically, weΆre not advising pricing any 2014 crop cotton just yet. WeΆve also done projected balance sheets for 2014/15 under three different weather scenarios in the FOCUS section. And in two of the three scenarios (normal weather or poor weather), ending stocks decline and our average farm price forecast is well above current 2014 new crop futures. Only under an “ideal” weather scenario do they go up, and even then not by very much. And as we note in the FOCUS section, our planted acreage assumption for only a slight downturn in 2014 is conservative compared to others weΆve seen in the private trade.