Neither the temperature nor sales are hot right now. All sales netted out to 83 krb, with -56 krb old and 139 new. Mex was high at 20 krb, 2nd was Indo at 9 krb, Thai was 3rd at 8 krb, and 4th was Viet at 5 krb. When is the last time Viet only bot 5 krb? Shipments were good at 276 krb, and are 240 krb above the target. With a half week to go, add another 100 krb for exports to arrive at about 14.4 Mrb. This converts to 14.85 Mb (480#).
New crop cumulative sales are 5.27 Mrb, and when the roll is added next week, the 17/18 year will start out with a bang. A guess is 6.25 Mrb, which means the US needs sell only 6.85 Mrb the rest of the year to make the target (7.1 Mb, 480#). The current year began with a cumulative of 3.62 Mrb, about 58% of the new crop figure. It is obvious that the USDA is using only a ratio of 60% of total supply to arrive at new crop exports.
Varner View
A couple of savvy analysts have whispered in our ear, that the beginning of the market year sales total does not correlate well with how the year actually turns out. This is true, but we are impressed by the huge number anyway. Sales in the last 8 months have been beyond all expectations. Moving over into the weather scare du jour, looking at several websites on the Indian monsoon data is rather inconsistent if one wants to find a problem. The very, very short term does indicate less rain than normal, but this is in a space of only a few days, not weeks. Weather up until around 7/25 has been very good, and for the moment we do not see anything more than a lull in the monsoonal flow. We remain negative, and are selling for specs and farmer hedges here and now.
Technicals
Retrace levels and extension targets for this correction are: 6890, 6905, 7011, and 7090. The high so far is 7058, so this is just as right as any other. The spot contract has reached back to the roll gap from the July to Oct, and gaps have been proven to be good magnets to attract price. Timing is interesting as a year ago on 8/05 cotton made a major high. An intermediate high was made on 17 Aug 2015, and a major low was made on 1 Aug 2014. Cotton made a high near 94c on 16 Aug 2013 and declined to 74c. Point is, that cotton tends to make important price reversals in early Aug. Sell.
