Cert stocks have dribbled out to about 125 kb, down about a third from a few weeks ago. With the RGV crop so short these certs will likely all be needed in the transition. Weather in India is better, but there is no rain forecast for the Llano Estacado. Our recollection is the last rain was on 7 July, and it was a good one. All of Texas north of Austin needs a rain.

Cotton is following grains and other leaders, but is not too attached to the outside markets. Grain markets exploded on the upside fueled mainly by overly short specs, and have now imploded on the downside. Seems there is a lot of angst in major commodity newsletters as some of the funds have been whipsawed both ways. Perhaps they should try cotton and be satisfied with a market that has gone nowhere, has nowhere to go.

Varner View

We would exit shorts from here to 6300, and a spec can try longs there. However, with month end coinciding with Friday, there may be commodity purging in various markets all this week. We view the row crops as approaching a support zone, but have no idea what a bounce will look like, if it comes at all. Cotton at least has a years history of short rallies, followed by short selloffs. Buy at 6300, exit at 6800.

Technicals

The third of 3 negative seasonals is due now into Friday. A year ago on 1 Aug cotton made a major low, and the 360 count from that date falls tomorrow. Trend line support is at 6360, and a double low is at 6310. Specs can buy here for a scalp.

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MrTopStep Group
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