Old-Crop Cotton (May)
Weekly Close: 82.40, up 4.45 cents
Trends: Secondary (Intermediate-term) = Down, Minor (Short-term) = Up
May-July Futures Spread: 1.34 cents carry, Bearish
Analysis: Despite higher weekly closes both old-crop May and July contracts still look to be in secondary (intermediate-term) downtrends. Recent rallies are minor (short-term) uptrends that began with bullish spike reversals on March 26. Last week’s move looks to be confirmation of Wave 3 of the 5-wave minor uptrend pattern.
Theoretical Position: It’s likely most of 2020 production has been sold at this time. It’s possible short July positions were established near the weekly close of 89.71 (week of February 22) due to the bearish key reversal. July closed last week at 81.41.
New-Crop Cotton (December)
Weekly Close: 78.74, down 3.77 cents
Trends: Secondary (intermediate-term) = Down, Minor (Short-term) = Up
Dec-March Futures Spread: 0.19 cent inverse, Bullish (but trending down)
Analysis: Similar to old-crop, the minor uptrend looks to be Wave B (second wave) of the secondary 3-wave downtrend. The secondary chart pattern looks to be a bear flag with the next upside target area between 82.31 and 83.95. Daily stochastics are nearing the overbought 80% level, opening the door to a possible turn to a Wave C selloff to complete the secondary pattern.
Theoretical Position: It’s possible some short hedges were put in place near 84.33, the close the week of February 22. If needing to get additional sales on the books, wait for the minor uptrend to show a top.
Old-Crop Sugar (May)
Weekly Close: 15.19, down 0.57 cent
Trends: Secondary (Intermediate-term) = Down, Minor (Short-term) = Up
May-July Futures Spread: 0.05 cent inverse, Bullish (but trending down)
Analysis: The minor uptrend looks to be Wave B (second wave) of the 3-wave secondary downtrend pattern. The upside target area is between 15.78 and 16.45, with the inverted May-July futures spread making the higher retracement more likely.
Theoretical Position: End-Users: Long positions were established near 11.75 the week of May 4 based on a bullish key reversal the week before. The last of these positions were likely stopped out below the previous 4-week low of 15.71.
New-Crop Sugar (October)
Weekly Close: 15.35, up 0.61 cent
Trends: Secondary (Intermediate-term) = Down, Minor (Short-term) = Up
Oct-March Futures Spread: 0.24 cent carry, Neutral
Analysis: The minor uptrend looks to be Wave B (second wave) of the 3-wave secondary downtrend pattern. The upside target area is between 15.29 and 15.67, with the with the weak carry of the Dec-March spread making the 15.48 to 15.67 range likely.
Theoretical Position: Producers: Some short hedges may have been established near the close the week of February 22 at 15.60 based on the completion of bearish reversal patterns. Additional short positions could be placed near the recent weekly close of 15.40 based on the week’s bearish outside range.
