South Plains Cotton Update

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

Treading water would best describe this week in the cotton market. The chart for December 07 has a classic wedge formation, indicating a market looking for a new direction. Add to that the convergence of the 9, 18 and 40-day moving averages and we have what looks like a magnifying glass focusing a ray of sunshine on an ant. Of course the ant is the August Supply/Demand Report and Crop Production Report due out first thing Friday morning, which just happens to be the first field survey based yield estimate of the season. If I were a speculator, today is a great setup for a straddle. If you don't know what that is, I wouldn't recommend even thinking about trying it. This market is likely to find a new direction tomorrow and it's anybody's guess whether it is up or down. The cash market also remains very flat as the pace of sales and exports for the new marketing year offer nothing to get excited about.

The current average industry estimate of the total U.S. cotton crop, according to AgWeb.com, is 17.7 million bales up from the July estimate of 17.5 million. My personal belief is that exports will be raised to 13.2 million, lowering beginning stocks, thereby leaving U.S. ending stocks unchanged in tomorrow's estimate. Domestic mill use likely will be unchanged as well. Worldwide, the Chinese keep cotton stocks and use information as closely guarded as nuclear secrets. The flooding in India is primarily in the northern state of Bihar which is more heavily planted to corn and rice than cotton. There appear to be no other large scale crop problems anywhere in the world to dramatically change the approximately 40% stocks-to-use ratio forecasted in the last Supply/Demand Report.

Net Upland sales for the 2007/08 marketing year, which began August 1, were 77,600 running bales. The major buyers were China (24,400), Thailand (10,600), Mexico (10,500), and Turkey (10,300). Outstanding sales of 1,597,600 on July 31, (the end of the 2006/07 marketing year) were carried over to 2007/08. Net sales of 11,250 for delivery in 2008/09 were for Mexico. Exports of 274,500 for July 27-31 were primarily for China (119,700), Turkey (47,900), Indonesia (23,000), Mexico (21,800), and Pakistan (13,300). Accumulated exports of 11,978,700 running bales of upland should be more than sufficient, when combined with the 652,400 running bales of American Pima, to meet or exceed the current USDA estimate of 13.0 million 480-pound bales. Upland exports of 103,500 for August 1-2 were mainly to China (45,200), Turkey (18,500), Mexico (13,600), and Indonesia (6,300). Exports for own account increased by 67,200, of which 65,900 were for China.

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Scattered showers across the area brought timely relief to cotton crops ready for a drink. Most areas covered by the West Texas Mesonet received at least some precipitation. Floydada, Paducah, Roaring Springs and Gail all receive over 2 inches. Temperatures are finally getting up to what we normally think of for West Texas in the summer. Tulia recorded a high of 100 degrees yesterday with several locations in the Rolling Plains over 100. The rest of the High Plains was only a few degrees behind. The forecast for today and tomorrow looks like more of the same.

Area extension ag agents continue to comment on the outstanding, but late, crops in their counties. This week's temperature should help with that. They also bring up the issue of pockets of aphids approaching levels requiring treatment. If you haven't checked fields yet, it would be a good time to start. The last thing we want is an area-wide aphid problem. Crop condition ratings remain virtually unchanged from last week, with 19% poor to very poor, 48% good to excellent and the remaining 33% rating fair.

Farm bill rhetoric is getting thick as the Senate prepares to take up the matter after the Labor Day recess. The word recess makes me think of an elementary school playground, how appropriate. Whatever Congress and the Administration finally come up with, the Texas Extension Risk Management group and the Ag & Food Policy Center at A&M will be ready to help farmers analyze their options under a new farm bill. I have every confidence that the level of cooperation between the local and state FSA offices and Texas Cooperative Extension will be just as good as it was last go around. I guarantee that the North Texas Regional Risk Management group is already preparing to help all our producers make the choices necessary for and efficient farm program signup.

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 August 14th at 7:30 a.m. and will feature regular speakers Carl Anderson, Mike Stevens, O.A. Cleveland and Pat McClatchy. As always, everyone is welcome to join the Lubbock County Marketing Club at the Posey Gin for the teleconference.

That's your South Plains cotton update for Thursday, August 9th. 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.