South Plains Cotton Update

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday, April 12th, 2007.
Jay Yates, Extension Risk Management Specialist at the
Texas A&M Agricultural Research and Extension Center.

The weather tops the South Plains cotton news again this week. Only this time it is the wildly erratic conditions that caught our attention. We have gone from a high of 84 on April 2nd to a high of 31 on April 7th with 1 to 3 inches of snow. Then on Monday night we received around a quarter of an inch of rain, followed by a sandstorm on Tuesday. Last week I commented on the cost savings of good beginning soil moisture as we get ready to plant this year's cotton crop. According to comments in the weekly crop report by county agents, some of those cost savings are being used up by increased cost of land preparation. Not just because of high fuel prices, but also due to the crazy weather. Between re-listing fields and running sand fighters the cost of getting the land ready to plant has seen an increase this year over last. There are also some reports of re-applying yellow herbicides.

It's been a couple of weeks now since the USDA Prospective Plantings report came out. The corn market reacted with back-to-back limit down moves, but with December corn still well above $3 per bushel, feed grains are still a viable alternative for many High Plains farmers. There still seems to be some indication that producers have not fully made up their minds what to plant this year. The feeling that I get from producers is that with the good soil moisture, most will start with cotton and then be ready to replant to milo in the event of early season losses. We welcome the rain, but we have to always keep in mind that when you live on the plains, with moisture, comes hail. We had very small losses last year because it never rained. And unlike drought which takes out the lowest yielding dryland acres first, hail does not discriminate base on productivity.

If you need help analyzing all the opportunities available this year with high grain prices and the best soil moisture in April ever, contact me for a comprehensive, risk-based analysis of your current operation compared to any alternative scenarios you might be considering using the FARM Assistance program.

Net Upland sales of 314,200 running bales were 12 percent below the week earlier, but 1 percent above the prior 4-week average. The primary buyers were China (170,000), Turkey (41,000), Thailand (18,400), Indonesia (14,700), India (14,500), and Taiwan (12,400). Exports of 272,700 were 4 percent below the week earlier, but 18 percent above the prior 4-week average. The primary destinations were China (102,000), Turkey (54,200), Mexico (15,600), Indonesia (14,100), and Thailand (11,600). Net American Pima sales of 37,900 were mainly for Pakistan (16,200), India (6,600), South Korea (4,400), and Japan (3,200). Sales of 13,300 for delivery in 2007/08 were mainly for Germany (5,600) and India (5,500). Exports of 14,200 were primarily to Pakistan (4,200), India (2,400), Japan (1,500), and China (1,400).

USDA reduced projected exports to 13.5 million bales in the World Ag Supply/Demand Estimate released Tuesday, April 10th. Given the current levels of sales and shipments, that number may still be too high. To reach the 13.5 million bale estimate, we need to ship over 425,000 running bales per week for the rest of the marketing year. If we ship last week's marketing year high of 317,700 running bales every week for the rest of the marketing year we will only reach 11.65 million statistical bales. I should add here, that it is still logistically possible to ship 425,000 bales per week, since last year from this time until the end of the marketing year we averaged 459,000 bales per week.

The December cotton contract closed down 73 points this week at 5844 yesterday compared to 5917 last Wednesday. The May contract also lost ground as the funds began to roll positions to July closing down 144 points to 5182 from 5326. Certificated stocks remain high at 659,341 bales and CCC upland loan stocks remain at a staggering 10,737,486. The price range seems to be well established as huge stocks keep a lid on the market and healthy export demand keeps a floor under the market.

The Lubbock county marketing club met this morning at the Posey Gin office to listen to the monthly Ag Market Network teleconference. This week's program featured O.A. Cleveland (who has been absent the past few months), Mike Stevens and Carl Anderson. My favorite quote of the day was from O. A. Cleveland, when after listing a long litany of negative factors for the cotton market this year; he said "I am still optimistic about this cotton market." Dr. Anderson did say he felt there was a slim chance that exports could make the new USDA forecast of 13.5 million bales, but that he felt it would not drop below 13 million. Mike Stevens indicated that Monday's price break was the result of a "monstrously large open interest", but that he was encouraged that the market held to less than a 1 cent decline. To hear the entire recorded teleconference, go to www.agmarketnetwork.net.

We still have one last opportunity to work on those marketing skills before the planting season begins. The New York Board of Trade and Cotton Incorporated are again sponsoring the “Hedging with Options” workshop in Lubbock Tuesday, April 17th at the Holiday Inn on Avenue Q. There is no cost to attend, but to register, contact Raquel Allen at (212) 748-4094 - rallen@nybot.com or Kay Wriedt at (919) 678-2271 - kwriedt@cottoninc.com.

For more information on cotton marketing be sure to check out Dr. John Robinson's weekly cotton marketing newsletter by clicking on the Cotton Marketing link from the Extension Ag Eco website agecoext.tamu.edu.

That's your South Plains cotton update for Thursday, April 12th. This is Jay Yates, Risk Management Specialist with Texas Cooperative Extension. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950.