South Plains Cotton Update

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday November 8th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

This has been one of the most gradual falls I think I have ever seen in West Texas. The colors of the leaves on the trees makes one almost think they were back east until you look around and see all the cotton fields surrounding you. I didn't know we had any species of trees that turned such beautiful colors because all the leaves normally get turned brown by the abrupt freeze following a month of extremely warm temperatures. We could actually use a good hard freeze now to finish killing the last few green leaves on this cotton, since it is actually a bit too cool for defoliants to work any more. Everything north and west of a line from Childress to Seminole has had freezing weather since the first of October. Freeze Map

Harvest is off to a good start, with the Lubbock classing office passing the 600,000 bale mark this week. The average grade so far has been color 21, leaf 2, staple 35.8, mike 4.3, strength 29.0, uniformity 80.9 and only 3.4% bark. Statewide, over 2 million bales have now been classed. The best part about this year's crop is that it should be the easiest one to sell in a long time. We just need to get the word out that West Texas has the largest volume of high quality cotton anywhere in the world. I interviewed Dr. Krifa from the International Textile Center on Tuesday's show and from what he had to say; there should be no reason for textile mills around the world not to want to buy this crop.

Crop conditions reported by County Extension Ag Agents continue to improve as more of this crop gets opened up and we see what we really have. Reports of dryland yields from 1 to 3 bales per acre and irrigated yields from 2 to 4 bales per acre are being reported from almost every county in the district. Ninety-two percent of the crop is said to have open bolls with most counties reporting 100% open. Harvested percent jumped from 14% last week to 24% this week. I look for the percent harvested to jump at least 10% per week as long as the dry weather continues. As one Lubbock area farmer told me this week, "If we have one more week of this good weather, we'll just about have this thing hemmed in." That pretty much sums up all of Lubbock county, which went from 35% harvested 2 weeks ago to 55% last week and probably 75% this week.

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.

Net Upland sales of 248,600 running bales were up 26 percent from the previous week and 41 percent from the prior 4-week average. The major buyers were China (71,900), Turkey (46,400), Pakistan (31,100), Mexico (27,600), Indonesia (13,100), and Thailand (10,700). Exports of 174,300 were 2 percent below the week earlier and 19 percent under the prior 4-week average. The primary destinations were Turkey (43,700), China (43,100), Mexico (33,000), and Indonesia (16,100). Net American Pima sales of 15,200 were primarily for Pakistan (6,700), Peru (2,900), India (2,400), Italy (1,100), and Portugal (1,000). Exports of 8,200 were mainly to Pakistan (2,600), Taiwan (2,500), and India (900).

Certified stocks have leveled off this week with 609,281 in warehouses, 4,331 bales issued by USDA and 42,700 awaiting review. USDA Loan stocks of Upland cotton increased this week to 3,823,463. ELS stocks also increased to 25,234.

Sideways action continues for the nearby December contract. Cotton Price Chart Although we have had multiple gyrations within the 62-66 cent range, the frequency and amplitude of the changes have been such that the 9, 18 and 40-day moving averages are now all mathematically equal. I'm not sure that I have ever seen that occur for 3 days in a row like we have now. What I think that means, is that December '07 is trading on a well-known set of fundamentals, and while outside forces move the market up and down, it is not enough to break it out of the 4-cent range that has dominated the nearby since the first of October. Poor export numbers will now most likely have their greatest impact on December '08, due to a larger beginning stocks for the new year.

There have been some cash contracts out there for 700 off Dec '07 with 100 point premiums for each 32nd over 34 that look like a pretty good alternative to worrying about loan forfeiture charges again next summer and fall. As far as next year's crop, continue to watch for opportunities to sell the crop when Dec '08 is over 7500. When oil was $15/barrel the competition from cheap synthetics kept a lid on cotton prices. Now with oil trying to break $100, we are afraid that the high price of oil will put the world economy in a recession and kill cotton demand. It just goes to show, "it's always something!"

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 teleconference will be Tuesday November 13th at 7:30 a.m. The Lubbock County Marketing Club will be meeting at the Posey Gin on Highway 84 between Lubbock and Slaton, so come on out and listen with the group and have a cup of coffee before heading out to the stripper.

That's your South Plains cotton update for Thursday, November 8th. 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.

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday November 15th, 2007.

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

I have not seen a freeze map on the West Texas Mesonet site updated for this morning's freeze yet, but the temperature in Lubbock stayed below freezing for about 4 hours. But, just like the previous two freezes, not much below.Temperature Graph

Harvest continues to progress at a rapid pace with the percent harvested jumping nearly 20% this week, as reported by County Extension Ag Agents. Lubbock County shows the highest percent harvested at 75%, followed by Castro at 70%, then Hale, Crosby and Borden at 65%. The lowest percent harvested is in the Cochran, Yoakum and Mitchell county areas. Crop ratings continue to climb as well with the percent of acres rated poor and very poor declining 9% to only 6% and fields rate good and excellent rose 13% to 70%.

Ginning is progressing as well with the Lubbock classing office standing at 848,328 bales classed as of November 13th and the Lamesa office at 258,702. The average grade so far has been color 21, leaf 2, staple 35.7, mike 4.1, strength 29.5, uniformity 80.6 and only 1.7% bark. Statewide, 2.45 million bales have now been classed. The grades at Lamesa are almost identical.

Many area farmers will be done by Thanksgiving if the weather stays as nice as it has been. Our prayers go out to two of our friends, Josh Keeney and Glenn Schur, both unable to finish harvest without the help of neighbors this year due to unfortunate accidents. We wish you both a speedy recovery. Thanks to all who have helped getting their crops out and to everyone else, be safe out there.

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.

The export report will not be out until tomorrow due to the Veteran's Day Holiday. Look for over 300,000 running bales shipped to meet the new USDA estimate of 16.2 million 480-pound bales. As the season wears on, I look for USDA to readjust the export forecast to keep the number of running bales needed to ship at about 300,000 until we get into Spring. What that means is that every week we are below 300,000 will likely cause USDA to revise the estimate downward in the following month's report.

Certified stocks remained steady to slightly higher this week with 622,645 in warehouses, 9,512 decertified, 2,276 bales issued by USDA and 45,047 awaiting review. USDA Loan stocks of Upland cotton increased this week to 4,302,430. ELS stocks also increased to 32,874.

After reading last week's market comments in preparing to write this week's comments, I was tempted just to cut and paste the whole thing into the new market update, since nothing has changed. But then I thought about my listeners and realized that y'all are smarter than that and I need to try to find something new to talk about. We have had a new supply/demand report come out since last Thursday. However, since it was on Friday most of you probably already know that USDA is forecasting a new record national yield and TASS is projecting the same for the South Plains at 799 pounds across all irrigated and dryland acres combined. Given the number of 2.5 and 3 bale dryland reports I have heard recently, I have no doubt we will reach that new record.

December '07 traded 192 points lower this week closing at 6315 on Wednesday compared to 6507 last Wednesday, still safely within the 62-66 cent trading range established the first of October. This will be the last time we look at Dec '07 for current crop pricing, since we only have 5 trading days, including today, until first notice day and next Thursday is Thanksgiving.Price Chart I will be taking a break and going to see my grandson's in Tucson, oh and I guess my daughter and son-in-law also. December '08 looks like it's trying to fall into a sideways pattern now between 72 and 76. If the price holds at 72 during this current downtrend, I will feel confident that we are in for a rather lengthy ride up and down between 72 and 76. Not good news for option holders, but the stability might allow merchants to offer cash forward contracts at a level better than we have seen in a long time. I'm afraid that the 78-cent Dec '08 we were holding out for to lock in a local cash price of 70 cents may just be a pipe dream now.

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 teleconference will be Tuesday December 13th at 7:30 a.m. with special guest Peter Egli of Plexus Cotton.

That's your South Plains cotton update for Thursday, November 15th. 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.

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday November 29th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.

The cold front that pushed through the area over the Thanksgiving holiday brought a break to the intense harvest that has steadily progressed up to this point. Heaviest snowfall amounts were in the southernmost part of the High Plains from Gaines to Scurry Counties. This latest front brought solid freezing temperatures to the entire area covered by the West Texas Mesonet, with the northern counties reaching the mid to upper teens and the southern counties in the mid twenties.
Freeze Map

Harvest slowed down slightly this week, due to weather and the holiday, but still progressed by nearly 10% to 66%, as reported by County Extension Ag Agents. Bailey, Lubbock and Parmer Counties show the highest percent harvested at 90%. Mitchell and Terry Counties continue to lag behind the pace and since they received some of the highest snowfall amounts in the weekend storm, I don't expect them to progress much this week either.

The Lubbock classing office surpassed the 1 million bale mark since my last report. Currently standing at 1,467,454 bales classed as of November 28th, with the Lamesa office at 449,998. The two offices combined are grading nearly 400,000 bales per week. The average grade so far has been color 21, leaf 2, staple 35.9, mike 4.1, strength 29.6, uniformity 80.7 and only 1.6% bark. Statewide, 3.54 million bales have now been classed. The grades at Lamesa are mostly the same with 3.3% bark.

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.

Net Upland sales of 248,400 running bales were primarily for Turkey (63,300), China (37,500), Vietnam (32,100), Indonesia (28,000), Mexico (19,500), and Thailand (13,000) with a decrease of 7000 bales from Canada. Exports of 165,500 were shipped to China (46,800), Turkey (43,900), Mexico (20,200), and Indonesia (17,800). Net American Pima sales of 13,200 were primarily for Pakistan (5,200), China (2,600), India (1,800), and Thailand (1,300). Exports of 9,000 were mainly to China (2,800), India (1,500), Switzerland (1,400), and Pakistan (1,200). Combined shipments of 174,500 running bales is substantially below the over 310,000 bales needed each week. As I stated in my last report, I expect USDA to gradually reduce the export number as the year progresses if we continue to post low export numbers.

Certified stocks declined this week with 584,307 in warehouses, due to 85,972 bales being decertified yesterday. There were also 6,541 bales issued by USDA and 14,724 awaiting review. USDA Loan stocks of Upland cotton increased again this week to 6,291,925. ELS stocks also increased to 105,840.

Dr. Robinson commented on my last report that there's nothing wrong with cutting and pasting market comments from one week into the next week. Since December '08 is in a solid range between 72 and 76, which was confirmed by the post holiday plunge, which stopped at 72, there's really nothing new to talk about. The market will continue in its bi-polar track, which sends it diving on recession fears and leaping on fears of losing too many acres to the grains. When I think about the biggest force in the cotton market, I am reminded of the 1992 Clinton campaign phrase coined by James Carville, "It's the economy stupid." With the rapid expansion of yields through technology around the globe, I don't believe the crop can be short enough to cause the kind of prices we saw in 1995, but a worldwide recession could put and end to the rapidly growing demand we have seen over the past several years. The other thing to think about for next year is that half the U.S. crop will likely be in Texas next year, with 75% of that being in the High and Rolling Plains. We should have more weather related market action over the next year.
Price Chart

As far as this year's crop is concerned, if you haven't already sold it, next time the market moves back to the upper end of the range, find a buyer. The March contract will likely settle into a range about 2 cents higher than December, then fall off at the end when the large funds begin to roll forward and first notice day approaches. That would mean a range of about 64 to 68. At the upper end of that range, with a 500 point off contract for 31-3-36 you would get about 5 cents over loan. With cottonseed prices high enough to pay all the ginning charges and maybe more, this will be the most we have received for the crop in a long time.

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 teleconference will be Tuesday December 13th at 7:30 a.m. with special guest Peter Egli of Plexus Cotton.

That's your South Plains cotton update for Thursday, November 29th. 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.