South Plains Cotton Update

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

Well, the final planting date with full crop insurance coverage for cotton has come and gone for most High Plains counties. Lynn and Dawson still have until Sunday. Some planting for reduced coverage continues due to the many delays caused by wet weather. We have also seen some planters back in fields that were seeded some time ago, trying one more time to get a decent stand of cotton. Between cool wet weather and hailstorms, there is a fairly large acreage of sorry looking cotton right now. It will still be a couple of weeks before we know just how many more cotton acres will shift to grain after a full assessment of the crop condition.

Crop disaster assistance is another issue that has had my phone and email buzzing this week. I'm sure you have already heard all the details from other sources by this time, but with the hectic pace, which comes from planting season, it bears repeating one more time. Crop disaster assistance will be available for both quantity and quality losses for 2005, 2006 or 2007 crop years. Crop losses for 2007 crops are only for those planted before February 28th, 2007. That would pretty much rule out all High Plains crops in 2007, except maybe some onions. As in the past only one year may receive assistance. The bill, signed by the President on May 25th, instructs the Secretary of Agriculture to "make assistance available under this section in the same manner" as provided in the last two disaster assistance programs, "except that the payment rate shall be 42% of the established price, instead of 65%." The only other difference since the last program is that in the case of an insurable commodity (such as cotton), a producer shall not be eligible for assistance if they did not obtain a policy or plan of insurance under the Federal Crop Insurance Act for the crop incurring the loss. No crop insurance, no disaster payment. I will have the updated version of the crop disaster calculator posted on my website this afternoon and at all the usual places like the Lubbock Center and PCG as soon as possible.

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 117 points higher on the July contract for the week at 5155 up from 5038 last Wednesday. The December contract closed 130 points higher at 5730 up from 5600. Both the December and July contracts closed above the 9, 18 and 40-day moving averages, and the 9-day averages have crossed the 18-day averages with the 40-day averages likely to be crossed this week. The uptrend continues with both contracts reaching the 50% retracement level since the life-of-contract lows set on May 14th. Once the July contract is out of the way, the next target for December on the charts is 60 cents. Continue to watch for opportunities to redeem cotton from the loan during this uptrend for zero or greater equity.

Net Upland sales of 215,200 running bales helped bring total sales to 107% of the current estimated US exports. The primary buyers were China (77,300), Indonesia (40,100), Turkey (23,600), and Hong Kong (21,200). Exports of 395,600, a marketing year high, were 28 percent above the previous week and the prior 4-week average. The primary destinations were China (169,500), Turkey (66,200), Pakistan (28,100), Mexico (25,100), Indonesia (15,900), and Bangladesh (15,000). American Pima exports of 12,300 were primarily to China (4,200), India (2,100), Japan (1,700), South Korea (1,300), and Pakistan (1,300). Total exports of all cotton were 407,900, still over 13,000 bales short of the amount needed to make the 13.25 million bale USDA estimate. Next week look for a number just over 423,000 running bales. Our current pace of shipments would indicate a final tally of 13.1 million bales for the current marketing year.

Certified stocks climbed to 709,182 bales, with an additional 2,058 issued by USDA and 3,312 awaiting review. CCC upland cotton loan stocks, as of May 31st, dropped another 28% to 2,595,707 with over a million of those bales in Texas. Loans held by Texas producers only dropped 10% to 430,663. This week's price move should cause further reductions in loan stocks in the next report due out on Tuesday.

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 air next Wednesday, June 13th, featuring Carl Anderson, Mike Stevens and O.A. Cleveland. Come join the Lubbock County Marketing club at Posey Gin to cuss and discuss the market comments at 7:15 Wednesday morning.

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, June 7th. 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.

This week brought warmer temperatures and drier weather and the difference can really be seen in area cotton fields. It's becoming obvious which fields have the most natural resistance to seedling disease because most seed treatments only provide protection for 14 to 21 days according to the experts here at the Experiment Station. Farmers I have talked to say the same thing. Those varieties that rated well for disease resistance in Dr. Wheeler's trials have been holding up well in farmer's fields. Last year's dry weather didn't reveal the weaknesses in some varieties we have seen this year. Just another reason why producers shouldn't put all their eggs in one basket when it comes to variety selection.

USDA is currently in the process of surveying farmers about what they planted this year. For some of our High Plains producers, I'm not sure they can completely answer that question yet. The good cotton looks really good right now, if you don't look at the calendar. Areas where hail or excessive moisture has taken its toll will probably be replanted to milo, but so far producers appear to be in a wait and see mode. We are already running behind on heat units. According to graphs prepared by Dr. Boman for the bi-weekly Plains Cotton Advisory Group last Friday, we are running well behind the long-term average heat unit accumulation for the year. The past few seasons were all above the long-term average by this time in their respective years. The Texas High Plains ET Network has information on heat units, as well as ET rates, for a wide range of locations across the High Plains. The easiest way to reach the website is from the Lubbock Center home page, lubbock.tamu.edu.

I brought up crop disaster assistance last week and wanted to mention the rest of what I didn't have time for in that segment. First we have updated the Crop Disaster Payment Calculator and posted it on the Plains Cotton Growers site (plainscotton.org), the Lubbock Center site (lubbock.tamu.edu) and the South Plains FARM Assistance site (tceblogs.tamu.edu/mt/spcu). If you need an estimate of what your payment will be, go to the year for which you had the disaster, remember, it is either 2005 or 2006, not both. Select the crop that was planted, the county it was in, whether it was irrigated or dryland, verify that it was insured and whether or not it was harvested. You will also need to know the APH yield, the crop insurance indemnity you received, the premium paid and the amount of production counted for insurance purposes, either estimated by the adjuster or actually harvested. The second thing you need to do is be patient. My sources tell me sign-up will not likely occur before mid to late fall, then USDA is required to make payment within 60 days of application. Merry Christmas.

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 89 points higher on the July contract for the week at 5244 up from 5155 last Wednesday. The December contract closed 70 points higher at 5800 up from 5730. Futures prices remain firmly established in an uptrend that is not likely to slow down until December hits the 60-cent, steel reinforced, concrete ceiling. Both the December and July contracts gapped higher on the open this morning presumably on the excellent export number reported by USDA.

Net Upland sales of 139,700 running bales were sufficient to take us to 110% of projected exports. The primary buyers were China (52,000), Turkey (32,300), Indonesia (11,100), and Pakistan (8,200). Exports of 438,600, a marketing year high, combined with 13,000 running bales of American Pima to give a total shipments number of 451,600. The primary destinations were China (217,900), Turkey (61,500), Pakistan (31,900), Indonesia (22,600), Mexico (22,400), and Thailand (16,100). Net American Pima exports were primarily to Indonesia (4,300), China (3,000), and Pakistan (1,200). This is the first time this marketing year we have actually exceeded the number of bales needed to meet the USDA estimate, which by the way was lowered another 250,000 bales to 13.0 million 480-pound bales.

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.

For a complete review of the latest World Ag Supply Demand Estimate go to the Ag Market Network website and listen to the recording of Mike Stevens and Carl Anderson giving their take on what the report means to the cotton market. You have go and listen to Dr. Anderson gloat over being right on last month's suggestion to buy 56-cent December calls.

That's your South Plains cotton update for Thursday, June 14th. 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.

The big news in cotton this week is what happened at the New York Board of Trade yesterday during live trading. At noon December cotton was limit up, 300 points, to 6210, where it stayed for roughly 15 minutes before floor traders started taking profits. Last week I referred to the concrete ceiling of 60 cents. Well I guess the traders on the floor of the exchange went to work with jackhammers in their brief cases Wednesday. A look at yesterday's intraday chart shows that December never even slowed down during its march from the previous day's close of 5910 to the noontime life-of-contract high 6210.

The rise above 60 cents is consistent with the current up trending chart pattern we have been in since setting a new life-of-contract low 5160 on May 14th. In just over 5 weeks, the market has increased 10.5 cents. If you are still one of the people holding on to any of the 1.9 million bales of cotton in the loan, you might want to hang on just a little bit longer. The 3-cent rise in futures this week could actually translate into a positive equity offer today, before the change in the loan redemption rate later this afternoon. But, given the bold move through 60 cents December made yesterday, it might be worth waiting to see how this all plays out. Strong exports (enough to bring year-end totals back to an earlier 13.5 million bale USDA estimate), could combine with shrinking cotton acreage to make this year's market exciting.

Net Upland sales of 201,100 running bales were at the top end of trade estimates and 44 percent higher than last week. The primary buyers were China (122,200), Turkey (24,100), Thailand (13,100), Hong Kong (12,200), and Mexico (10,800). Exports of 438,300 were virtually the same as the previous week, and when combined with American Pima exports of 14,300, set a new marketing year high 452,600 running bales. The primary destinations were China (180,500), Turkey (59,900), Indonesia (38,500), Mexico (37,200), Pakistan (33,500), Taiwan (16,800), and Thailand (10,900). Net American Pima exports were primarily to Pakistan (3,800), India (2,600), Japan (1,900), China (1,500), Indonesia (1,500), and Thailand (1,300). The number of bales currently needed for the final 6 and a half weeks of the marketing year is 375,000 per week. If we continue at the 450,000 bale mark, exports could climb back to 13.5 million.

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.

Most stations in the West Texas Mesonet reported at least some rainfall this week. In the area, which includes Spur and Jayton, just over 2 inches were received. Eight locations received more than an inch and another 15 measured one-half to one inch. Lamesa saw its first daily high over 100 on Monday, with Lubbock not far behind at 98. Heat unit accumulation for the week was about normal, but still well behind for the year.

Crop conditions, as rated by area county extension agents, are all over the place, but look like one of those bell curves that some teachers used to grade us on. The greatest percentage of the crop is rated fair at 42%. Next is the good category with 27%, followed by poor at 18%. Seven percent of the crop is rate very poor and 6% excellent. There is a slight bias toward the upper-end of the scale with 33% in the good to excellent category, compared to 25% poor to very poor. Some agents also report that the crop is only 95% planted. Those unplanted and very poor acres are likely to be planted this week and next to some other crop.

USDA will be publishing its annual Planted Acreage report next Friday. Enumerators are currently out trying to determine how many acres of what crop has been planted this year. The problem here on the South Plains is that farmers themselves are also trying to figure out what to do with their land right now. For some it is no question. The cotton crop is off to an excellent start with plenty of moisture in the soil and daytime highs in the low to mid 90's. Ten miles down the road all the cotton is sick and dying. Another ten miles and you don't see anything but corn and milo.

I have seen a lot of planters back in the fields this week filled with milo and even some with soybeans. Jackie has even told me that he is receiving questions on soybean marketing and cost of production. I guess it's been long enough since the last time they grew soybeans to forget why they don't grow soybeans on the South Plains.

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, to listen to archived recordings of the Ag Market Network conference calls, as well as weekly commentary from Mike Stevens, go to the AgMarketNetwork.net website. The next live broadcast will be from the New York Board of Trade on July 13th, as always, at 7:30 a.m.

That's your South Plains cotton update for Thursday, June 21st. 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.