South Plains Cotton Update

Jay Yates, Extension Risk Management Specialist
Lubbock Agricultural Research and Extension Center

April showers have left nearly the entire South Plains with adequate to surplus soil moisture. Soil temperatures have been a little slow in coming up, but are also on the rise as we approach peak planting season. Virtually all reporting stations in the area now have a ten-day average soil temperature of 60 degrees or higher at the 8-inch depth. You can check out the latest soil temperature information at the Plains Cotton Growers website plainscotton.org.

According to data gathered by the West Texas Mesonet, all reporting stations received some rainfall during the month of April, with 2 sites over 3 inches, 11 at 2 inches or better and 40 receiving 1 or more inches for the month. A line of thunderstorms Wednesday brought enough extra moisture to supply the remainder of planting needs.

Cotton planting began in some counties last week, according to reports from county extension ag agents. This week, however, saw the full scale start of the planting season. In my travels this week I saw trailers of seed on the road and planters in the field everywhere I went. I also noticed during prime time TV in Lubbock Tuesday night that every commercial seemed to be for cotton seed. I know this is not any kind of scientific observation, but it does seem to confirm the rumor that I have heard that farmers have delayed their seed purchase decisions to the very last minute this year.

If you are one of those folks still trying to decide, be sure to check out the Lubbock Center website at lubbock.tamu.edu. Right in the middle of the page you will find links to Dr. Ganaway's 2006 Cotton Performance Test and Dr. Boman's 2006 System Trials. Plains Cotton Growers has an excellent seed cost calculator to figure out exactly what that high priced bag of seed will cost you per acre at there website.

Speaking of trying to decide what to plant, the FARM Assistance strategic analysis can help you make those long-term decisions like whether or not to pick or strip your cotton. And if you decide to pick it, would it be better to have it custom picked or buy or lease a machine on your own. Decisions like these are what the FARM Assistance system was designed for. To schedule an analysis call me at 806-746-6101.

Net Upland sales of 394,400 running bales slipped 21 percent from the previous week and 20 percent from the prior 4-week average. The primary buyers were China (104,400), Turkey (61,400), Pakistan (58,100), Hong Kong (27,600), and Indonesia (22,900). Sales of 76,600 for delivery in 2007/08 were primarily for Mexico (21,100), Indonesia (18,000), El Salvador (15,300), and China (7,900). Exports of 324,800 were 3 percent below the previous week's marketing-year high, but 14 percent above the prior 4-week average. The primary destinations were China (104,200), Turkey (65,800), Pakistan (28,000), Mexico (24,300), Colombia (13,600), Brazil (13,500), and Indonesia (10,900). Net American Pima sales of 6,900 were mainly for China (2,800), Hong Kong (1,300), and Pakistan (1,000). Sales of 6,900 for delivery in 2007/08 were primarily for Pakistan (2,600), Switzerland (2,200), and Brazil (1,500 MT). Exports of 21,800 were mainly to China (11,900), Pakistan (4,400), and Turkey (2,200).

Total shipments of all cotton at 346,600 running bales are still woefully short of the 440,000 bales needed this week. However, 11,711,700 total running bales sold this year are 89% of the predicted 13.5 million statistical bales, which is the same percentage as last year. Also, the 447,100 running bales we need to ship each week for the rest of this year are 25,000 bales per week less than what we actually shipped this time last year. The big difference is that we don't have a step 2 program about to expire.

That brings us to the current situation with the New York futures price. Without a step 2 program this year, the only way to move out this large volume of cotton left behind is to lower the price relative to the A-index. The other drag on the market is the high level of certificated stocks, now at 716,729 with 3,806 awaiting review. Also putting pressure on the price is the tremendous volume of cotton in the loan. Last week, 230,309 bales were redeemed, leaving 10,139,521 bales still in the loan.

New York futures lost nearly 300 points this week on both the old and new crop. The July contract fell 261 points from 5123 to 4862 and the December contract fell 280 points from 5600 last Wednesday to 5320 yesterday. The only positive in this market is that prices at these levels are the only hope we have of clearing out this huge carryover we are facing.

The ICAC World Cotton Supply and Distribution report came out his week indicating a projected drop in world carryover from 47% last year to 43% this year and 38% next year. Based on that forecast, they are projecting a world price 4 cents higher next year. This year's weighted average US price stands at $0.4777 according to the NASS Price report on Monday. If ICAC is right, the 07/08 CCP should be in very little danger next year and is completely out of the woods for this marketing year.

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. Also, the Ag Market Network will be May 15th at 7:30 a.m., featuring Carl Anderson, Mike Stevens and O.A. Cleveland, with special guest speaker Peter Egli of Plexus Cotton Limited.

This newsletter, as well as any resources mentioned, is now being posted to tceblogs.tamu.edu/mt/spcu and on DTN Local News Page 7. Of course, you can always reach me at the Lubbock Center at 806-746-6101.

That's your South Plains cotton update for Thursday, May 3rd. 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.

Jay Yates, Extension Risk Management Specialist
Lubbock Agricultural Research and Extension Center

Rains of 1 to 3 inches this week across the entire region are the big news. The area south of Lubbock received the heaviest rains with 5 locations on the West Texas Mesonet recording more than 4 inches of rain so far during the month of May. The big winner (or loser if you got flooded) is Seminole with 5.14 inches of rain since the month began. Other South Plains towns with more than 4 inches are Gail, Lamesa, O'Donnell, and Seagraves. All though not on the South Plains, Memphis also has received more than 4 inches during May. So for all of you who have said we just need one more good general rain to have enough moisture to get this crop started, here's your sign.

Now, it is time to bring out the sun to warm and dry the fields for planting. According to county extension ag agents, planting got under way in full swing on Monday, just before the flooding rains started on Tuesday. Last week we did make some progress with most agents reporting 1 to 5 percent of the crop planted for the week ending May 4th. Before this storm soil moisture was reported adequate to surplus in all areas. If you were to take a sampling today I sure most would be considered surplus.

Last year we fielded questions in our office about prevented planting due to drought and the simple answer was that there is no such thing in West Texas. Flooding rains to our south could actually bring the prevented planting discussion back to the forefront this year. It is still too early in the planting season to call, but if we continue to have a similar pattern of rainfall, there could be some individual fields that actually qualify.

Most corn has already been planted and there's nothing corn likes better than lots of rain. Since this storm did not produce much hail, it was also beneficial to wheat growers who are planning on harvesting grain. I'm sure the seed company marketing folks are happy too, since they convinced their bosses to continue to offer the drought shared risk programs again this year after writing big checks last year.

The FARM Assistance strategic analysis program can help you make long-term decisions like whether or not to pick or strip your cotton. And if you decide to pick it, would it be better to have it custom picked or buy or lease a machine on your own. Decisions like these are what the FARM Assistance system was designed for. Call me at 806-746-6101 to make an appointment.

Net Upland sales of 509,000 running bales were 29 percent above the previous week and 2 percent over the prior 4-week average. The primary buyers were China (198,800), Turkey (118,100), Indonesia (44,900), Pakistan (40,600), Thailand (23,200), and Taiwan (17,200). Sales of 29,500 for delivery in 2007/08 were primarily to Colombia (7,300), China (4,400), and Vietnam (4,100). Exports of 296,200 were 9 percent below the previous week, but 1 percent above the prior 4-week average. The primary destinations were China (127,600), Turkey (48,500), Mexico (18,100), Taiwan (15,100), South Korea (12,100), Thailand (11,600), and Indonesia (11,100). Net American Pima sales of 24,800 were mainly for China (21,900) and India (1,000). Exports of 57,800--a marketing-year high--were primarily to China (38,600), India (5,400), and Turkey (3,800).

Total exports of all cotton at 354,000 running bales were slightly higher than last week, thanks to a marketing year high shipment of Pima, but are still short of the 421,000 bales needed. The current pace of exports would indicate a final tally of about 12 million bales compared to the 13.5 million bale USDA estimate. The current projection is logistically possible as this year's sales are actually ahead of last year, on a percentage of total basis, and during this time last year we shipped and average of 430,000 bales per week. Additionally the Chinese cotton imports have historically been high during the May to July period according to the recent USDA-FAS China Annual Cotton Report. That same report also predicts that China will increase usage by 6 million bales and decrease production by 1.15 million bales with a resulting 7.59 million bale increase in imports.

That brings us to the current situation with the New York futures price. The July contract stopped the 3 week long slide and increased 20 points to close at 4882 yesterday. The December contract closed up 55 points to 5375. Although not enough increase to break the downtrend from a technical standpoint, it is nice to see that we appear to have found the bottom for now. Maybe the market has found a level at which we can move out enough of this crop to make the USDA export estimate. The new supply/demand report comes out tomorrow, given recent action on price, look for a decrease in projected exports and domestic use and an increase in US carryover. Don't expect a big reaction out of market, given the big losses we have already seen. We might even see a slight increase in price if carryover is not increased substantially.

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. Also, the Ag Market Network will be May 15th at 7:30 a.m., featuring Carl Anderson, Mike Stevens and O.A. Cleveland, with special guest speaker Peter Egli of Plexus Cotton Limited.

This newsletter, as well as any resources mentioned, is now being posted to tceblogs.tamu.edu/mt/spcu and on DTN Local News Page 7. Of course, you can always reach me at the Lubbock Center at 806-746-6101.

That's your South Plains cotton update for Thursday, May 10th. 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.

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday May 17th, 2007.

Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

The top story this week is the return to the fields by area cotton farmers. Tractors with planters, trailers of seed and rod weeders making final seedbed preparations, have all been common sights in my travels this week. The other common sight has been fields of emerging feed grains. One stretch of highway 54 in Hale County made me forget that I was in the World's Largest Cotton Patch. I felt more like I was in Nebraska, with all the pivots towering over the seedling corn.

After last week's downpour, the rain has subsided in most areas, giving way to dry, but still somewhat cool, conditions across the area. Rain forecasts this week only resulted in 1/4 to 1/2 inch in the Northern Rolling Plains on Tuesday and 1/4 to 1/2 inch in the lower counties of the Southern High Plains on Wednesday. As my frequent appearances as host of the Ag Talk program this week would attest, the area north and east of Lubbock has had excellent planting weather.

Cotton planting is considerably behind normal for this time of year. Dr. Boman showed me a summary of last week's county agent reports compared to the 5-year average. A simple average of that report indicates that we are about 12% planted right now. If I remember correctly, the average is somewhere in the 20's. Corn planting however, is over 80% complete in the Southern High Plains counties which normally plant some corn. There are also reports of increased acreage of milo being planted, primarily in the southern counties.

I would expect the USDA Planted Acreage report which comes out at the end of June to have substantially reduced acreage in the Northern High Plains and somewhat reduced acreage in the Southern High Plains. From what I can see and the people I have talked to, the Rolling Plains will most likely continue to plant as much cotton as ever. I have heard reports that cotton strippers are being traded in 2-to-1 for combines north of Amarillo. In other parts of the cotton belt, pickers are cheaper than ever.

The FARM Assistance strategic analysis program can help you make long-term decisions like whether or not to pick or strip your cotton. And if you decide to pick it, would it be better to have it custom picked or buy or lease a machine on your own. Decisions like these are what the FARM Assistance system was designed for. Call me at 806-746-6101 to make an appointment.

New York futures closed up slightly on the July contract for the week at 4919 up from 4903 last Wednesday. The December contract closed 42 points lower at 5350 down from 5392. Both contracts closed above the 9-day moving average after posting new life-of-contract lows Monday at 4690 on the March contract and 5160 on the December.

Net Upland sales of 292,100 running bales were 43 percent below the previous week and 47 percent under the prior 4-week average. Increases for China (157,300), Turkey (42,500), Pakistan (29,500), Indonesia (26,000), Vietnam (15,800), and Thailand (14,400), were partially offset by decreases for Mexico (42,700). Sales of 57,100 for delivery in 2007/08 were primarily to Mexico (45,600, including 45,000 switched from 2006/07), Thailand (4,000), and China (4,000). Exports of 268,800 were 9 percent below the previous week and 10 percent under the prior 4-week average. The primary destinations were China (91,000), Turkey (40,500), Mexico (23,300), Indonesia (18,100), Pakistan (14,600), South Korea (11,000), Thailand (10,800), and Taiwan (10,500).

Total exports of all cotton at 305,100 running bales were 14% lower than last week and are still far short of the 411,000 bales needed, even with the lower USDA estimate this month. The good news is that we have now sold 100% of the current USDA estimate of 13.25 million bales. The big question is whether or not it will all be shipped before the end of this marketing year.

If you have already listened to this month's Ag Market Network conference call, you would know that Peter Egli doesn't believe that is a problem. By his calculations (as best I could follow), the Chinese will run out of cotton 2 to 3 months before having any new crop available and that supplies will actually get very tight by the first of October. If he is right you might want to continue to hold on to that loan cotton until we see how this situation plays out. I am somewhat skeptical though, because I have heard that justification for higher prices before and it didn't work out very well. He did have some good bullish comments that I wholeheartedly agree with. One is that when the market is near the bottom, everyone is most bearish. Second, cotton is ridiculously cheap compared to grains. Mike Steven's also pointed out something that I had noticed as well. The USDA estimates for China are considerably more bearish than last week's Chinese Ag Attache report. Carl suggested buying December 56 cent calls to cover those cotton acres being planted to something else. With what happened in the market on Tuesday and Wednesday, he might just have been right.

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. Also, the Ag Market Network, which aired on May 15th, featuring Carl Anderson and Mike Stevens with special guest speaker Peter Egli of Plexus Cotton Limited, is available for download at agmarketnetwork.net.

This newsletter, as well as any resources mentioned, is now being posted to tceblogs.tamu.edu/mt/spcu and on DTN Local News Page 7. Of course, you can always reach me at the Lubbock Center at 806-746-6101.

That's your South Plains cotton update for Thursday, May 17th. 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.

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday May 24th, 2007.

Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

Regular listeners of this program know that I sat in for Eddie again this week on Tuesday. That means that cotton farmers returned to the fields in full force after light weekend showers across much of the area. May rainfall totals range from a low of 1.16 inches in Hereford to a high of 6.59 in O'Donnell so far this month. Ten-day average soil temperatures, as provided by the National Weather Service in Lubbock, remain in the lower to mid 60's across the area. However, once that cotton seed gets sprouted, it doesn't have the most favorable of growing conditions waiting for it. The accumulated growing degree days since May first in Lubbock are only at 141. Lamesa hasn't fared much better, gaining only 158. The polar cotton region, represented by Etter, has only received 84 heat units since the beginning of May.

Of course a lack of heat units for cotton in the area north of Amarillo may not be that big of an issue this year for the crop overall. According to Dr. Brent Bean, who was a guest on the show Tuesday, a lot of former cotton acres have gone back to corn this year due to high grain prices and good beginning soil moisture. Clyde Crumley, Gaines County IPM agent reported a return to peanuts and more grain sorghum acres pairing back cotton planting in his area. The excellent wheat growing conditions also has prompted more farmers to carry that crop all the way to grain harvest cutting into even more cotton acres. The June planted acreage report should be interesting.

Cotton planting in the South Plains Extension District continues to lag well behind normal, according to weekly reports issued by county ag agents. The average of locations reporting for the week ended May 18th is 29% planted compared to the 5-year area average of 56%, as calculated by our very own Dr. Randy Boman, extension cotton agronomist for the biggest cotton patch in the world. I have a feeling, with the warm dry winds we have had most of this week, next week's number will be much closer to normal.

The FARM Assistance strategic analysis program can help you make long-term decisions like whether or not to pick or strip your cotton. And if you decide to pick it, would it be better to have it custom picked or buy or lease a machine on your own. Decisions like these are what the FARM Assistance system was designed for. Call me at 806-746-6101 to make an appointment.

New York futures closed down slightly on the July contract for the week at 4914 from 4919 last Wednesday. The December contract closed 93 points higher at 5443 up from 5350. Both contracts closed above the 9 and 18-day moving averages. Another technical chart indicator of a bottom in both contracts was the crossover of the 9-day moving average up through the 18-day moving average. It's looking more and more like we should have taken Dr. Anderson's advice last Tuesday when he suggested buying 56 cent December calls to cover those cotton acres that are being planted to something else.

Net Upland sales of 356,200 running bales were 22 percent above the previous week, but 16 percent under the prior 4-week average. Increases were reported for China (118,000), Turkey (92,100), Mexico (20,300), Thailand (19,400), Pakistan (17,200), and Taiwan (14,600). Sales of 35,400 for delivery in 2007/08 were primarily to South Korea (18,700) and Indonesia (7,800). Exports of 361,500, a marketing-year high, were 35 percent above the previous week and 18 percent over the prior 4-week average. The primary destinations were China (143,700), Turkey (79,500), Mexico (29,500), Indonesia (24,700), Taiwan (15,500), and Pakistan (14,600). Net American Pima sales of 13,700 were primarily for China (9,900), Thailand (1,500), Pakistan (1,300), and Taiwan (1,000). Sales of 2,200 for delivery in 2007/08 were for Peru (1,300) and Pakistan (900). Exports of 34,000 were primarily to China (10,300), Pakistan (8,000), Turkey (5,000), and Indonesia (3,100).

Total exports of all cotton at 395,500 running bales were 30% higher than last week and above industry expectations, but still short of the 411,000 bales needed. Next week, and beyond we will need to see a number in excess of 412,000 to meet the USDA forecast. Currently merchants have sold 103% of the current USDA estimate of 13.25 million bales. The question remains whether or not it will all be shipped before the end of this marketing year. The current pace of shipments would indicate a final tally of just over 13 million statistical bales. So don't be surprised to see one more 250,000 bale adjustment from USDA before the end of the marketing year.

Certified stocks continue to be a burden on the market with 706,085 bales in delivery point warehouses, with an additional 992 issued by USDA and 2,560 awaiting review. CCC upland cotton loan stocks also remain high with 8,929,660 total bales in the loan. Over 2.7 million bales are still in producer's hands, while the remaining 6.2 million belong to coops and other grower representatives. Thirty percent of all loan cotton is in Texas, with just over 600,000 of that still held by the farmers that grew it. The best strategy for that cotton at this point is probably just to let it ride and see what happens with the new crop. That seems to be the only part of this market with any hope of higher prices.

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. Also, the Ag Market Network, which aired on May 15th, featuring Carl Anderson and Mike Stevens with special guest speaker Peter Egli of Plexus Cotton Limited, is available for download at agmarketnetwork.net. The next conference call will be on June 13th.

This newsletter is now being posted to tceblogs.tamu.edu/mt/spcu, myspace.com/jayates85 and on DTN Local News Page 7. Of course, you can always reach me at the Lubbock Center at 806-746-6101.

That's your South Plains cotton update for Thursday, May 24th. 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.

Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

Today is the final planting date for full crop insurance coverage for cotton planted in Bailey, Castro, Lamb, Parmer, Swisher and all counties to the North. Most of our High Plains counties have until June 5th and Lynn and Dawson counties have until the 10th of June. The Rolling Plains has until either the 10th in the north and the 20th in the south. The problem remains wet fields and a seven-day forecast with a good chance of showers every day. We also have not had sufficient heat or sunshine to get this crop started. The month of May has not seen a single day in the 90's or above. Accumulated growing degree days for the month of May range from 220 at Lamesa, to 198 at Lubbock and 120 at Etter.

Rainfall since my last report has ranged from 1 to 3 inches across a wide area, with a significant amount of hail south and west of Lubbock. Some hail was even reported to have killed cotton that wasn't emerged. First the heavy rains washed the soil off of the sprouting cotton, then the hail came and beat it off. For the month of May all sites, except for Hereford, in the West Texas Mesonet received more than 2 inches of rain. Twenty-seven reported more than 4 inches and Seminole topped the charts with 8.53 inches and we still have one more day with a 40% chance of thunderstorms to go.

Cotton planting in the South Plains Extension District made tremendous progress last week. The average percent planted across the Southern High Plains nearly doubled, increasing from 29% the prior week to 57% at the end of last week. Most farmers I talk to are only 4 to 5 good days from finishing.

I spent the holiday weekend in the Seymour area and it looks like wheat harvest got started in a big way on Tuesday. Memorial Day morning the town was filled with combines and grain trucks, the next day everything was gone and that evening the trucks were all lined up at the elevators. I'm sure they would like to see a good stretch of dry weather the next couple of weeks as well.

The FARM Assistance strategic analysis program can help you make long-term decisions like whether or not to buy or lease the adjoining farm. And if you buy it, what repayment terms can you afford? Decisions like these are what the FARM Assistance system was designed for. Call me at 806-746-6101 to make an appointment.

New York futures closed 124 points higher on the July contract for the week at 5038 from 4914 last Wednesday. The December contract closed 157 points higher at 5600 up from 5443. The December contract close above the 9, 18 and 40-day moving averages, while the July contract closed above both the 9 and 18-day averages. Both contracts are firmly in an uptrend, but don't look for them to go too much higher in the short-term, because we still have a lot of cotton to move.

Due to the Memorial Day Holiday, there is no export report today. The report will be out tomorrow. Just remember we need to ship over 412,000 running bales of all cotton per week for the next 11 weeks to make the current USDA estimate of 13.25 million statistical bales. The cotton is already sold for delivery this year, it remains to be seen if it will all get shipped in time.
Certified stocks climbed to 708,347 bales in delivery point warehouses, with an additional 612 issued by USDA and none awaiting review. CCC upland cotton loan stocks dropped dramatically ahead of the change in calculation of the AWP that occurs every year at this time. The 16th and 17th of May were the final, and only days including in this inventory report, before the new AWP went into effect. The coops made a major move, redeeming 78% of the cotton they had in the loan, reducing their stocks from 4.8 million to only 1.4 million bales. Texas producers, however, only withdrew 9% of the cotton they held individually in the loan, reducing their inventory by only 54,000 bales. The new total stock of upland cotton in the loan now stands at 3,607,567 bales. The fact that the market continued to rise in the face of massive loan redemptions is a good sign that the lows are now in. There is still hope for Texas cotton still in the loan if it has enough time to wait for a good weather scare to run this market up a bit higher.

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. Also, the Ag Market Network, which aired on May 15th, featuring Carl Anderson and Mike Stevens with special guest speaker Peter Egli of Plexus Cotton Limited, is available for download at agmarketnetwork.net. The next conference call will be on June 13th.

This newsletter is now being posted to tceblogs.tamu.edu/mt/spcu, myspace.com/jayates85 and on DTN Local News Page 7. Of course, you can always reach me at the Lubbock Center at 806-746-6101.

That's your South Plains cotton update for Thursday, May 31st. 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.