With todayΆs whimpering close the 2012/13 marketing year came to an end. It is the longstanding policy here at Doane to never carry old crop into the new crop year in terms of our selling advice. Therefore, IΆm advising cash marketers to sell that last 10% by “default”, you might say. WeΆve been holding out for some sort of weather scare rally but we just never got it. To the contrary, we saw it start raining in the southern Plains. And even though many producers and analysts are huffing that it was “too little, too late”, it was enough to throw a wet blanket on any rally potential.Tomorrow is the official start of the 2013/14 marketing year for cotton. And since itΆs the last day of the month, the long-term monthly chart will get a closing hashtag within a remarkably narrow trading range. Take a look at the chart first, then see my closing remarks that follow:
As you can see in the captions on the chart, the monthly chart for cotton shows futures continuing to work their way into the vortex of what technicians call an “ascending wedge” formation bounded by a horizontal overhead resistance line and bounded at the bottom by an uptrend line.
By definition, a “vortex” gets tighter and tighter and eventually the market has to break out one way or the other. Statistically, most ascending wedge formations break out to the top side. But as dull as the cotton market has become, with remarkably tight monthly trading ranges, we could be well into 4th quarter before futures would “have” to penetrate one boundary or the other. Even so, the best spin I can put on the current fundamental and technical situation in cotton is that I see no reason to push new crop sales any further; only catch-up sales.
I have heard from a southeastern grower that rain has been excessive for cotton in that part of the country and seriously impacting yield potential from the “too wet” side of weather impact on cotton. IΆm going to post a poll question regarding the extent of that and ask anybody who grows in the SE or Delta, where itΆs also been quite wet, to respond.
