South Plains Cotton Update

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.

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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.