January 24, 2024

All of the futures markets can spend significant time going sideways to nowhere but there are ALWAYS some few markets that are in gear and making BIG sustained moves. And the trick in this business is to recognize when they may be getting started…and GO WITH THEM…which is exactly where I think we are in Cotton now…having closed today at almost 3 month highs.

Cotton traded sideways in a 10 cent range (80-90) for all of 2023…and ended the year by spending the last few months stuck on the low side at about 80 cents. With the ag media full of stories citing, “NO demand for Cotton,” and “NO exports to China,” and “the Chinese economy is tanking!”, I am dead certain that the average Cotton farmer has been living the last 3-4  months in fear of sharply lower prices…And commensurate with that, when January 1^st and the new tax year arrived, I KNOW FOR A FACT THAT FARMERS HAVE BEEN SELLING THEIR RECENT HARVEST LIKE THERE’S NO TOMORROW…pretty much each and every day for the past 3 weeks…right up until today when they have been “selling cotton like crazy.”

HOWEVER, even though those constant and HEAVY sales have been hitting the market day after day, which you would expect to put downward pressure on prices, COTTON HAS BEEN GRINDING RIGHT THROUGH ALL THAT SELLING…AND CLOSED TODAY ROUGHLY 6 CENTS OFF ITS JANUARY 1^ST LOWS…AND AT ALMOST 3 MONTH HIGHS.

Why is this significant?

Because, one, there is obviously strong demand coming from somewhere that has absolutely overwhelmed all the selling…And two, because it is highly likely, that at some point, and SOON I think, farmers will be DONE…Sold out…but the demand (buying) will keep on coming…and with no selling to counter it, my guess is the stage will be/IS set for a runaway on the upside…

Put that together with the Stock Market making new highs…And my observation in December that Cotton was tracking the DOW (up 5000 points in Nov & Dec) with something like a 1 (or 2) month lag…And that all of the braindead analysts and economists who have predicted a recession SINCE October, 2022, are finally giving up…And that the economy, in my view, continues to absolutely lift off…? With all that in mind, especially with all that farmer selling behind us, COTTON RALLYING A “NORMAL” 20 TO 30 CENTS FROM HERE JUST FEELS OBVIOUS TO ME.

I think it IS going relatively straight up from here. GO WITH IT. BET ON A STRONGER ECONOMY…Don’t just watch it happen. Call me and let’s get you on it.

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Cotton