South Plains Cotton Update

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.