The Brits have decided that it will be they – and they alone – who determine who is eligible for citizenship within their borders, as well as how they patrol and enforce those borders. The US, among others, had strongly urged the UK to remain within the European Union (EU), and using the US as a practical example, were remain in generally fine shape, although we neither control our southern border or immigration very efficiently.

I just cannot understand why they would want to leave. Perhaps we are being afforded a sneak preview of the influence of Donald Trump’s foreign policy agenda, should he and Melania find themselves downsizing and moving into 1600 Pennsylvania Avenue come January.

For our market, BritainΆs exit from the EU had the effect of allowing the value of US currency to surge as sterling devalued. Of course this is not healthy for US export business, or even overall demand, but at least the uncertainty surrounding the event has passed – the initial part, at any rate.

On to cotton specific news.

Export sales for the week ending June 16th were surprisingly strong for both old and new crop stocks and continued to reinforce the notion that significant demand for US bales exists from 63.50 – 64.50. However, shipments were off the pace required to meet the USDAΆs 9M bales export target.

Outside of the slow advance of the annual monsoon across portions of northern India this week, not much has changed on the supply side. Tightness still exists for nearby stocks in India which has prompted mills to import cotton from both West Africa and neighboring Pakistan – a scenario which mills in Pakistan officially oppose.

It is still a bit wet across northern Xinjiang in China, while it is remains hot and dry across much of the Former Soviet Union and the African Franc Zone. Here at home, conditions are improving, but rain will be needed across most areas before too much more time has elapsed.

I came across an interesting article this week, authored by former USDA Chief Economist Joseph Glauber and Dr. Daniel Sumner, a professor of Agricultural and Resource Economics at the University of CA, Davis. The authors blasted Secretary VilsackΆs decision to extend a one-time ginning cost subsidy to US cotton farmers; and further suggested that giving US cotton producers and inch is akin to enticing them to take a mile, which is, they suggest, what US producers are wont to do. They are very critical of the manner in which US producers have made use of the current federally subsidized crop insurance program.

Incidentally, Dr. Sumner, also served as the lead economic expert for Brazil in its recent WTO case against the US and its cotton producers.

Now, I know that it is not nice to tattle. I also know that Glauber and Sumner are entitled to exercise their First Amendment rights, much as I am doing now. I further realize that acting as counsel for a nation petitioning to do harm to US cotton producers via WTO appeal is not high treason on-par with selling military secrets to Russia or being a collaborator with ISIS, Al-Quada or Hezbollah. But it is very much in poor taste – especially given that he is employed by a state university that is charged through its research and extension programs to be a resource for domestic cotton producers. Still, I could be reading the article incorrectly. Take a look for yourself. Click here to read the article.

Coming Up…

Some producers may be receiving phone calls from their brokers and buyers in the coming week. In anticipation of market volatility following the Brexit vote and the June 30 planted acres report, some merchants have once again gotten aggressive with their forward contracting offers in the country. The move hasnΆt been universal however, and in some areas, there is as much as a 4 cent range between the best current offer and the lowest current offer. Further, while the aggressive offers are stronger than producers have seen in recent weeks, they are still 2-3 cents shy of producer asking prices.

We are happy to see some life in the forward contracting business, but at this time, we continue to see the best opportunity for producer pricing in the option pit, with at the money puts trading in the 300 pt range.

All that said, The June 30 report will appear on the Thursday before a long holiday weekend, and many cotton offices will be operating with a skeleton crew on July 1. Whether that translates to a flurry of activity Thursday afternoon or postpones the reaction until after the July 4 remains to be seen.

For next week, the standard weekly technical analysis for and money flow into the Dec contract remain bullish, with the market having mitigated its recent overbought condition. Export sales for the week ending June 23rd could again be strong, but shipments need to quicken. Post next ThursdayΆs export report (and just prior to a long holiday weekend) the USDA will release its June 30th acreage report. Reported US planted area that is trimmed 250+K plus acres Vs the March 31st report is likely to be supportive.

Have a great weekend!

Louis W Rose IV, PhD has worked with cotton as a producer, consultant, analyst and trader. Rose holds degrees in Education, Agriculture, Plant Science and Business (MBA) from AR St Univ, OK St Univ and the Univ of Memphis, respectively. He has held positions with Aon Reinsurance and Cargill Cotton. Rose currently provides analytic services for various clients and media outlets and is the co-founder of Risk Analytics, LLC, producers of The Rose Report, which he authors. For more info on The Rose Report or analytic services, please visit: www.rosecottonreport.com; Twitter: @RoseCottonRepor