Varner Bros – The Cotton Row Journal

agricultural, Commentary

A Bull for Christmas

All sorts of headlines tumbled out about a China trade deal, some saying it will be finalized this weekend, just in time to pre-empt the new round of tariffs. Several markets took off on this news, notably the ones we see as most sensitive to Chinese demands. The $ has helped on this liftoff also, as it is marginally lower in the last 2 weeks.

Cotton not only got a boost from the China news, but got good numbers from sales….again. Total was 283 krb, with Turk high at 80 and Pak 2nd at 61. Shipments did their usual poor showing, with 194 krb going out. Some day soon, probably mid Jan, this number will pick up. Depending upon one’s choice to forecast sales, something around 17.0 Mrb to 18.5 Mrb can be visualized. Then there are shipments, which project to 14.5 Mrb to 15.5 Mrb. No wonder the USDA is right in the middle. At 16.05 Mrb now, the ratio vs total supply is at 65.8%, dead even with last year, and 2 points below 2 years ago. Fair enough for now, but the 18 year avg is 60%, something to keep in mind.

Varner View

Charts look good, so do sales. COT positions indicate a flat spec, which means plenty of firepower if they choose to. Cotton is likely to move high enough to choke off some demand, and that is likely something with a “7” in front of it. Farmers have no zest to sell anything now, but would love a lucky 7. For new crop, the Dec looks like it wants to claw back some acres, and 69c doesn’t do it. There are a couple of prior lows on its chart at 7100, and the Dec 19 had some priors at 7225. Sounds about right.


Break outs for the spot chart, and for Mar and May. Momentum and seasonals are up, and cotton is nowhere near being overbought. There is some resistance for Mar at 6900, and one target is 6975. A 62% retrace from the Apr high is 7025. The spot chart shows a major low at 6953. Buy breaks. Chart below from Dave Toth, RJO tech analyst.

Varner Brothers
325 Cotton Row Cleveland MS 38732


(662) 846-6636

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