Jay Yates, Extension Risk Management Specialist at the
Lubbock Agricultural Research and Extension Center.
In the words of Mike Stevens on this months Ag Market Network conference call, "The end will come quicker than we think it's gonna come." The Ag Market Network conference call was this past Friday and the featured speakers included Mike Stevens and John Robinson who, in the absence of O.A. Cleveland, were vying for the best quotable market comment of the day. Mike also quoted another analyst when he made the comment about bull markets that "when they're over, they're over and they're not gonna ring a bell."
Both of these quotes epitomize the December 07 contract as it moved from life-of-contract low 5160 on May 14th to life-of-contract high 6880 on July 16th with no real change in fundamentals during that 9-week period. The same can said of the current bull run that started with the bottom on August 27th of 5697. Again we have had no dramatic changes in fundamentals, if anything we could make the argument that the cotton numbers have turned bearish, with an ever so slightly increasing forecasted world ending stocks. To understand this bull market we have to look beyond the cotton fundamentals. One factor is the record low value of the dollar. Thursday the dollar traded even with the Canadian dollar for the first time since 1976. I guess it's time to dig out all those Canadian quarters and dimes and go spend them, since they are finally worth the change we were given way back when. I wonder if the vending machines will be recalibrated to take them. Another comment made during the conference call was the competition for acres with the wheat/bean rotation in the Mid-south and Delta and South American corn and beans. The third factor mentioned was the speculative funds that see cotton as undervalued compared to other commodities. In another Stevens' quote he said "the specs can take it much farther than they should and they will" and that producer's should be ready to act because "when cotton moves it takes no prisoners."
In the local cash market we have seen a substantial rise in old crop equity offers for cotton in the loan from "stop calling me or we'll call the police" to offers to take the cotton out of the loan with no charges assessed to the producer. That's a big move since many of our farmers with cotton still in the loan were looking at forfeiture charges in the $20-25 range. Equity offers for new crop have climbed to 5 cents over loan.
Export sales rebounded somewhat this week, but still at an insufficient pace to meet the current USDA forecast. Net Upland sales of 177,900 running bales were primarily to China (55,700), Indonesia (32,000), Turkey (31,500), and Mexico (18,300). Exports of 247,900 were shipped to China (84,500), Turkey (51,100), Mexico (30,400), Thailand (16,500), Indonesia (9,000), and Taiwan (8,100). Net American Pima sales of 21,000 were for Japan (7,700), China (3,800), and India (2,600). Exports of 9,200 went mainly to Japan (3,000), Pakistan (2,700), and India (1,100). Total exports of 257,100 running bales were approximately 50,000 short of the number needed to make the 16.7 million bale estimate.
Certified stocks continued to grow this week with Wednesday's stocks at 491,341 bales in warehouses from Galveston, Texas to Greenville, South Carolina. The number of bales in the USDA Loan stands at 635,150 for upland and ELS combined.
The FARM Assistance analysis program can help you make strategic business decisions like whether or not to upgrade your harvest equipment or have the crop custom harvested. And if you buy, 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 local county Extension Ag agents, improved slightly again this week as fields ranked good and excellent increased by 0.3% to 51.8%, while those rated poor and very poor decreased by 0.5% to 16.3%. Continued warm weather and moisture contributed to the increase during the reporting period of September 8-14. 
Heat unit accumulation continues to rise on a straight line making in close in on the long term average. The current 10-day forecast would add another 114 heat units by the end of September, putting Lubbock at 2086 from May 1st to October 1st. That would also mean that a bloom set on August 5th in Lubbock would have enough heat units to be fully matured on October 1st. The longer term forecast is only to add 2-5 units per day during the month of October, so don't count on making much cotton after the first in the Lubbock area. I can't let the crop conditions stand without a quoted from John during the Ag Market Network. In relation to the 2-3 week late crop maturing into another High Plains record, he said "When you throw the ball, 3 things can happen and 2 of them are bad." Funny thing is I heard that same comment this week on Tech Talk with Robert, Jim 'n Eddie and Chris Level. So far the one good thing has happened to make another top yield since John made those comments last Friday. I don't even want to mention the 2 bad things that could happen, but Mike did remind us that the earliest recorded frost in Lubbock is October 7th.
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 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 Tuesday, October 16th at 7:30 a.m.
That's your South Plains cotton update for Thursday, September 20th. 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.
