Listening to the Ag Market Network Special Edition this Friday from the ICE in New York, you would think the West Texas crop was down and out. In the words of Mark Twain, "The reports of my death have been greatly exaggerated." At the bi-weekly meeting of the Plains Cotton Advisory Group you would have heard comments that would make you believe the High Plains is on its way to having one of the top 5 largest crops in history. The wide variety of crop conditions in the area makes for such speculation, with such divergent conclusions. One thing is for certain, anyone in the cotton business out here that you ask will tell you that there is more cotton standing in the Texas High Plains today than on this same day last year.
Reports of damage from wind, sand, hail and heat have more than been offset by the benefit of a general 1 to 2 inch rain across most of the area. The few thousand acres lost in these events are devastating to the individual producers affected by them, but they are minimal compared to the positive impact of an inch or two of rain on more than 3 million acres. It is safe to say that every inch of rain that generally covers the cotton growing area of the High Plains is worth about $50,000,000 to cotton farmers' bottom lines. Not to mention what it does for corn and grain sorghum production.
Pest pressure in the area is generally light. With timely rains, weeds are still the number one pest to be controlled. Although not widespread, southwest cotton rust has appeared in the region. While not normally a threat in the area, its appearance this early in the growing season is cause for at least some attention. I even found an infected leaf on a plant here at the research station in Lubbock today. We continued to look, but didn't find another before giving up.
At the Plains Cotton Advisory group meeting this morning we had an international group of visitors with a good perspective on the crop and market conditions from around the world. Crops from around the globe appear to be in fair to good condition, with some decline in acreage and production much like we are expecting in the U.S. Our international visitors were unanimous in stating that recent prices in the mid 60-cent range had made U.S. cotton too expensive and it would take a December futures price in the 57-59 cent range to entice new sales. The big issue remains demand as it relates to worldwide economic recovery. The slower the recovery, the worse for cotton fiber demand. Interestingly, the cotton chart this year has nearly mirrored the S&P 500 until this week when cotton dropped off significantly while the S&P remained steady. I don't think it is any coincidence since potential cotton demand is highly dependent on economic recovery and consumer confidence.
The release of 400,000 metric tons (1.8 million bales) of import quota by the Chinese was good news, but much of that cotton is already in Asian warehouses on consignment waiting to be delivered to mills, so it won't increase export sales by much. Export sales for the week ending July 16th were rather weak at 70,200 bales, but shipments were adequate to meet the USDA estimate of 13.3 million bales at 266,000 running bales. Primary destinations were Turkey, China, Indonesia, Mexico, Vietnam and Thailand.
For more information on cotton marketing be sure to check out Dr. John Robinson's weekly cotton marketing newsletter by clicking on Market Outlook under the Resources drop down list 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.
Remember to tune in every Thursday at 1:30 p.m. for the South Plains Cotton Market Update live on Ag Talk on Fox Talk 950.
