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.
