South Plains Cotton Update

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Friday August 24th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

We're delayed this week because of the Little League World Series. Congratulations to the Lubbock Western All Stars for making it to the U.S Championship game at 2:30 on Saturday against the Warner Robins All Stars from Georgia. A win tomorrow will put them in the World Series Championship Game against the International Champion on Sunday.

Unfortunately the news out of New York is not nearly as good as the news form Williamsport. Last Thursday while writing my weekly column, the cotton market was in the middle of a major meltdown. The market ended up closing down the 300-point limit. Every trading day since has seen the market trade completely within the range established last Thursday, with each successive day having an even smaller range. Thursday's close of 5861 was only 5 points higher than the open, suggesting the market may be ready to show us today which direction the market is headed in the future. A significantly lower close today could mean new lower prices in the weeks to come.

If you remember, the World Supply Demand figures were only mildly bearish earlier this month. However that combined with a technical setup which triggered numerous program trading models to start selling, a fear of a global economic slowdown and the disaster in the mortgage lending arena, which had fund managers scrambling for liquid capital and selling off positions in their long-only commodity funds. All these factors came together last Thursday for the perfect storm in the cotton market. This week we have been in the eye of the storm, just waiting to see which direction this market is heading when it comes out the other side.

Another good week of sales and shipments as net Upland sales of 397,600 running bales were 12 percent above the prior week. The major buyers were China (141,500), Turkey (111,300), Mexico (27,100), Thailand (23,800), and Taiwan (23,300). Exports of 310,900 were 9 percent below the week earlier and 23 percent under the prior 4-week average, but still at an excellent pace for this time of year. The primary destinations were China (117,100), Turkey (55,700), Mexico (32,400), Indonesia (30,000), and Thailand (13,700). Net American Pima sales of 3,900 resulted as increases for China (2,600) and Pakistan (1,800), were partially offset by decreases for Japan (1,300). Exports of 14,000 were primarily to China (3,600), Japan (2,800), Turkey (2,600), India (1,900), and Pakistan (1,300). Total exports of all cotton at 324,900 running bales brings total shipments to 134% of this time last year with an annualized rate of 18 million statistical bales, which is more than sufficient to meet the current USDA estimate of 16.7 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 program was designed for. Call me at 806-746-6101 to make an appointment.

Crop conditions, as reported by area county Extension Ag agents, deteriorated slightly this week for the first time in 4 weeks. Most of the decline came from the northern counties. We had some moisture this past week on the Western side of the High Plains, but the real rainfall was confined to a band from Gail east to Aspermont with anywhere from 3.5 to 6 inches in the storm last Friday and Saturday. The rest of the area has seen nothing but hot and dry with 20 to 30 mph winds for the last several days. Overall the dryland crop is shutting down and is predominately from 0 to 1 NAWF. Most irrigated is at or past cutout at 3 to 5 NAWF. My Grandpa always taught me to quit watering cotton on September 1st, so if he was right, and he usually was except that he always exaggerated the yields he used to make back in the forties, a good rain this week would be just what the cotton doctor ordered. Two inches of rain across the area would probably put the High Plains crop back over 4-million bales for the fourth straight season, thanks to ample early season rain and extremely low abandonment.

On the financial front, I received an article this week from Randy Neugebauer's office, which quoted Secretary Johanns saying that crop disaster relief signup would begin in October, with payments to made the following month. That goes right in line with what I shared earlier this year from my FSA insiders in College Station. If you need help setting up your farm accounting system, we still have a couple of spots open in Lubbock for the 2-day QuickBooks for Farmers and Ranchers Workshop August 28th and 29th here at the Agricultural Research and Extension Center. Call me at 806-746-6101 to register. We had an excellent group in Amarillo and are expecting the same in Lubbock based on current pre-registrations. DeDe Jones and Patrick Warminski will be coming down from Amarillo to help me teach.

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 AgMarketNetwork.net. The next conference call will be Friday, September 14th at 7:30 a.m. As always, everyone is welcome to come listen live at the Posey gin with the Lubbock county marketing club.

That's your South Plains cotton update for Friday, August 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.