South Plains Cotton Update

South Plains Cotton Update 3-6-08

2008-03-07T02:58:13Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday March 6th, 2008. Jay Yates, Extension Risk Management Specialist at the Lubbock AgriLife Research and Extension Center. Area county agents report High fire hazards and extremely dry conditions in virtually every county. Soil moisture ratings are all in the short and very short categories. Wheat conditions continue to decline in the High Plains, but in the Rolling Plains the crop looks somewhat better even though there was little to no grazing over the winter. Travels this week saw ground preparation in full swing with pre-plant yellow herbicides evident on spray booms and field cultivators across the area. High fuel prices, with farm diesel topping $3 per gallon, and dry weather conditions are causing most producers to limit the amount of tillage between crops this season. The ginning season is nearly complete and the season average grades are excellent. The Lubbock classing office recorded 83% 11 & 21 with leaf 3 or less. Average staple length was 36.0 with 67% of all bales measuring 36 or longer. Average strength was 29.5 with 99% rating 26 or stronger. Average Micronaire was 4.1 with only 12.4% at 34 or less and only 2.8% at 5.0 and over. Only 3.5% bales were graded as bark. The total number of bales classed as of February 29th in Lubbock was 3,722,758 and in Lamesa 1,443,820 for an area total of 5,166,578 running bales or about 5.3 million statistical bales. With both commodity and input prices at or near all-time highs, how do you decide which direction to take your farming operation? Should you buy a new combine or a cotton picker or just update the old strippers? All of these questions are what the FARM Assistance program were designed to help you answer. Call me at 806-746-6101 to schedule an appointment. USDA Loan stocks of Upland continued to decline to 9.89 million bales as of February 26th. ELS stocks also declined to 285 thousand. Certified stocks increased to 607,793 bales in warehouses, 8,848 issued by USDA and 84,005 awaiting review. As we expected, Net Upland sales of 97,300 running bales were down 50 percent from the previous week and 66 percent from the prior 4-week average. Increases were mainly for China (34,500), Turkey (17,200), Colombia (14,800), Thailand (9,900), and Indonesia (7,300). Net Upland sales of 20,700 for delivery in 2008/09 were mainly for Mexico (20,200). Exports of 270,700 were up 67 percent from the previous week and 45 percent from the prior 4-week average. The primary destinations were China (68,600), Mexico (37,100), Turkey (36,600), Indonesia (27,400), Vietnam (18,100), and Thailand (14,900). Net American Pima sales of 25,900 were primarily for Pakistan (7,300), China (6,600), India (3,900), and South Korea (2,300). Exports of 29,900 were mainly to China (10,500), Pakistan (4,100), the United Arab Emirates (2,600), and South Korea (2,400). Total shipments of all cotton were up significantly to 300,600 running bales, however that is still over 50,000 bales short of the amount required each week to meet the USDA estimate of 15.7 million 480-pound bales. Last week I wrote that the cotton market was just crazy. I don't know what metaphor to use this week, as the New York futures market has lost all touch with the reality of the fundamentals. As we see in the export report, new sales of cotton dried up for the week ending February 28th when prices made the jump into 80-cent territory. With prices now in the upper nineties for most of this week, expect next week's new sales to be nearly zero. The cash market completely shut down the middle of this week. I had growers contract '08 cotton for prices in the mid 80's before all activity shut down due to merchants' inability to cover their cash positions on the board. The two days of locked limit-up moves (Monday and Tuesday), don't even begin to tell the story. December '08 was trading synthetically in the options pit for 10900, which means those who were short at 8700 on Friday had to make margin calls of 22 cents per pound or $11,000 per contract by Tuesday afternoon. We left two gaps in the extreme upward movement back on February 21st and 29th at roughly 80 and 85 cents. Look for those two points to be the level this market seeks to return to. OK, here is my attempt to explain what I think is going on in the cotton futures market, besides the fact that the exchange went to all electronic trading this week. To a non-commercial commodity investor, cotton appears to be extremely cheap compared to the other major commodities. Using NASS published parity prices as the benchmark; I decided to see what each commodity has traded as a percentage of parity over the last two years. In February of this year wheat traded at 95% of parity, corn at 70% and soybeans at 80%. Cotton only traded at 38% of parity during the month of February, about where wheat, corn and beans were 2 years ago. Looks like a bargain if you ignore the fundamentals. 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. The next Ag Market Network conference call will be March 13th at 7:30 a.m., featuring Carl Anderson, Mike Stevens and O.A. Cleveland. As usual you are welcome to join the Lubbock County Marketing at the Posey Gin to listen to and discuss the comments made during the call. The Ag Market Roundtable discussion will be live at the Lubbock Civic Center, Friday April 4th at 7:30 a.m. Also, in conjunction with the TCGA Annual Meeting and Cotton Trade Show, on April 2nd starting at 8:30 a.m., Cotton Incorporated and Plains Cotton Growers will be sponsoring the Cotton Price Risk Management and Pricing Strategies Seminar with speakers, Carl Anderson, Mike Stevens, John Robinson, O.A. Cleveland and Kelli Merritt. We had the final installment of the South Plains Profitability Workshop on Tuesday. We had a very engaging group of producers along with our extension cotton marketing specialist, John Robinson and our extension grain marketing specialist, Mark Welch. The website associated with the workshop is southplainsprofit.tamu.edu. Check back from time to time for updated workshop information. That's your South Plains cotton update for Thursday, March 6th. This is Jay Yates, Risk Management Specialist with the Texas AgriLife Extension Service. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950. FARM Assistance - 1102 E. FM 1294, Lubbock, TX 79403 Tel. 806-746-4056 - Fax. 806-746-4057 - Cell 806-781-1002 - jayates@ag.tamu.edu - http://farmassistance.tamu.edu Educational programs of the Texas AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating

South Plains Cotton Update 2-28-08

2008-02-28T22:20:46Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday February 28th, 2008. Jay Yates, Extension Risk Management Specialist at the Lubbock AgriLife Research and Extension Center. The unanimous comment in county agent reports this week was that it is very dry every where. The little bit of moisture we received, as reported in last week's update, was immediately sucked up by warm temperatures accompanied by 50 to 60 mph winds. Fire danger is extremely high in all areas of West Texas right now. After last year's abundant rainfall during the growing season, there is plenty of fuel for the numerous fire that have burned the area this week. Traveling from Cochran County to Eastern Hale County Wednesday took me through a large cloud of smoke from a fire in Northern Lubbock County. Fire also threatened the communities of Snyder and Robert Lee this past week. Early planted dryland wheat is still alive. Anything planted past mid-September just isn't there. Irrigated wheat has started to grow with the warmer temperatures. Air temperatures were in the upper 60's yesterday with soil temperatures in the lower 50's. Small grains planted for cover on cotton ground are being irrigated, further adding to the increased cost of production for the current year. Fiber quality for the week ending February 21st remains excellent with the predominant color grade of 21+, leaf 3, staple 36.0, mike 4.1, strength 29.1, uniformity 80.6, and bark of 11.9%. For the same time period Lamesa had color grade of 21+, leaf 3, staple 35.7, mike 4.1, strength 29.0, uniformity 80.6, and bark of 20.6%. Season totals are almost identical, with lower total bark counts of 3.4% and 7.8% respectively. Daily receipts have dropped to only 16,000 samples per day, indicating about 10 days of ginning left to put this one in the books. Lubbock has classed 3.7 million bales and Lamesa 1.4 million as of Wednesday, February 27th. Pre-plant yellow herbicides are being applied across the area between wind storms. We have been fortunate so far that there has not been more sand blowing with the winds, just smoke. The farmers I visited with this week all seem to be planting pretty much the same as last year. We will definitely see more rotation of land with cotton disease problems however. I haven't spent much time south of Lubbock yet this year, so I'm not sure how many peanut acres we will have. With both commodity and input prices at or near all-time highs, how do you decide which direction to take your farming operation? Should you buy a new combine or a cotton picker or just update the old strippers? All of these questions are what the FARM Assistance program were designed to help you answer. Call me at 806-746-6101 to schedule an appointment. USDA Loan stocks of Upland continued to decline to 10.01 million bales as of February 19th. ELS stocks also declined to 291 thousand. Certified stocks increased to a total of just over 565 thousand bales in warehouses, 11,865 issued by USDA and 32,627 awaiting review. Net Upland sales of 196,300 running bales were less than half of last week's strong level. Sales were mainly to Mexico (63,900), China (36,200), Indonesia (20,400), Turkey (18,900), and Bangladesh (16,700). Net Upland sales of 11,500 for delivery in 2008/09 were for Turkey (4,400), Mexico (3,900), and Indonesia (3,200). Exports of 162,000 were also down significantly from last week. The primary destinations were China (48,500), Mexico (24,900), Indonesia (18,500), Turkey (17,800), South Korea (11,400), and Thailand (8,100). Net American Pima sales of 17,100 were primarily for India (7,200), Hong Kong (2,300), the Netherlands (2,200), and Turkey (2,100). Exports of 21,700 were mainly to Pakistan (6,000), India (4,000), the United Arab Emirates (3,300), and the Netherlands (2,200). Has anyone noticed that March '08 Minnesota Spring Wheat traded above $20 for the last three days? I know we don't grow for that market, but is that any indication of where July '08 Kansas City Hard Red Winter Wheat is going? I hope no one is still short wheat hoping it will come back to them. Cotton has been crazy this week. No doubt what is going on in the wheat market has had some impact. The big sales to China reported last Friday, followed by dismal sales and shipments reported this week have also had an effect on the market. More outside money continues to flow into commodities as investment managers see greater returns on commodity index funds than stock funds. This will continue to add both liquidity and volatility to the markets. The week was marked by a new life-of-contract high 8560 on the December '08 contract. After the 9, 18 and 40-day moving average convergence we have entered a clear up trend. However, the steepness of the trend combined with the 120 point gap just below 80 cents, indicates just how tenuous it is. I think the key word in this market until the acres are planted and the wheat crop is know, is volatility. 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. I would also like to take this opportunity to invite everyone to join us for the final presentation of the South Plains Profitability Workshop on March 4th (Yes, that's primary election day) at the Texas AgriLife Research and Extension Center at 1102 E. FM 1294 just north of the Lubbock airport. The cost is $20, which includes a delicious lunch and a take home CD. To get a head count for lunch, we would appreciate a call at 806-746-6101 to let us know you are coming. The new website associated with the workshop is southplainsprofit.tamu.edu. That's your South Plains cotton update for Thursday, February 28th. This is Jay Yates, Risk Management Specialist with the Texas AgriLife Extension Service. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950.

South Plains Cotton Update 2-21-08

2008-02-21T22:02:57Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday February 21st, 2008. Jay Yates, Extension Risk Management Specialist at the Lubbock AgriLife Research and Extension Center. The big news on the High Plains of Texas this week is rainfall, or the lack of it. The front that moved through last Saturday and Sunday brought much needed moisture to the parched landscape. The only problem is that it wasn't much. The most rain fell in the Northern Rolling Plains with Memphis receiving 1.21 inches. The top reading in the Southern High Plains was Tulia with 1.03 inches. The area around Lubbock received about a half an inch, while the southwest region received the least with Denver City, Snyder and Seminole all registering less than a tenth of an inch. Area county agent reports continue to cite dryness as the major threat to production for all crops in 2008. Fiber quality for the week ending February 14th remains excellent with the predominant color grade of 21+, leaf 3, staple 36.0, mike 4.1, strength 29.3, uniformity 80.6, and bark of 9.2%. For the same time period Lamesa had color grade of 21+, leaf 3, staple 35.8, mike 4.2, strength 29.0, uniformity 80.5, and bark of 17.7%. Season totals are almost identical, with lower total bark counts, as this crop has been one of the most consistent in history. I hear most of the contract talk is for base grade 31-3-35 or 36. Who would have imagined that only 10 years ago in Lubbock. The world has most definitely changed (For the better, I might add). I still don't have a good handle on what might happen with High Plains acreage this year. The most frequently requested alternative analyzed with FARM Assistance so far this year is 50/50 cotton and grain, or all grain, versus the standard of all cotton. The price for milo has finally gotten high enough that the alternatives are nearly equal. That wasn't the case last year, even though grain prices had risen dramatically compared to cotton. The producers who made the switch last year were fortunate to have timely rains to make up the difference. Of course the extremely dry winter has only those with adequate irrigation even considering corn. Peanut acreage will most definitely increase back to pre-2005 levels as prices have seen significant advances as well. With both commodity and input prices at or near all-time highs, how do you decide which direction to take your farming operation? Should you buy a new combine or a cotton picker or just update the old strippers? All of these questions are what the FARM Assistance program were designed to help you answer. Call me at 806-746-6101 to schedule an appointment. USDA Loan stocks of Upland cotton have already started to decline slightly to 10.11 million bales as of February 12th. ELS stocks are nearly 297 thousand. Certified stocks are steady with a total of slightly more than 506 thousand bales in warehouses, 11,139 issued by USDA and 61,234 awaiting review. The export report for the week ending February 14th is delayed until Friday due to the President's Day Holiday on Monday. I just want to make a little additional comment on the last report. Currently export sales and shipments are on track to reach a level of 15.4 million 480-pound bales this marketing year. USDA's latest estimate lowered total exports to 15.7 million from 16.0 million. If things don't pick up in dramatic fashion rather quickly, expect the Agency to continue to decrease the estimate as we fall short each month. That would increase ending stocks to 8.5 million bales, one million less than last year, but still nearly double domestic consumption. December '08 gapped higher on the open this morning to just over 80 cents. Higher markets overall this week after the convergence of the 9, 18 and 40-day moving averages last Friday has positive technical implications. With the major influence of the long only speculative funds we may be in for another run up. The only negative factor right now is that when prices have been this high in the past, exports sales have dried up. An 80-cent price also means it is time to revisit the floor setting strategy of buying an 80-cent put, selling a 70-cent put and selling a 90-cent call for a net transaction cost of 130. Just remember that is a marginable position, so have a plan in place to buy back the put and call on extreme opposite price moves. With the volatility we have seen this year, that should be no problem. The May contract also gapped up this morning on the open, although with the advent of electronic overnight trading I'm not sure that chart gaps have quite the significance they used to. Regardless, this should give the opportunity to look for positive equity offers on loan cotton or good prices for cotton which is just now being ginned. 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. I would also like to take this opportunity to invite everyone to join us for the final presentation of the South Plains Profitability Workshop on March 4th (Yes, that's primary election day) at the Texas AgriLife Research and Extension Center at 1102 E. FM 1294 just north of the Lubbock airport. The cost is $20, which includes a delicious lunch and a take home CD. To get a head count for lunch, we would appreciate a call at 806-746-6101 to let us know you are coming. The new website associated with the workshop is southplainsprofit.tamu.edu. That's your South Plains cotton update for Thursday, February 21st. This is Jay Yates, Risk Management Specialist with the Texas AgriLife Extension Service. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950.

South Plains Cotton Update 1-17-08

2008-01-17T19:52:46Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday January 17th, 2008. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. I think we can safely say that cotton harvest is complete in the Southern High Plains of Texas today. There may still be some cotton yet to be harvested in the Rolling Plains, but you would be hard pressed to find a single field that has not been harvested up on the Caprock. Ginning however still lacks 3 to 6 weeks depending on the area and the gin. As of January 15th, the Lubbock and Lamesa classing offices had inspected samples from 4.058 million bales of the 5.43 million estimated by the Texas Ag Statistics Service. The Southwest classing offices, all of which are in Texas, have combined to grade 6.5 of the 8.5 million bales projected for the region. Fiber quality remains excellent with the predominant color grade of 21+, leaf 2+, staple 36.0, mike 4.1, strength 29.3, uniformity 80.6, and bark of 4.5%. Lamesa had the same to slightly higher grades with 9.4% of bales classed as containing bark. USDA Loan stocks of Upland climbed to over 10 million bales this week. ELS stocks also increased to just over 270 thousand. Certified stocks continue to decline with a total of slightly more than 509 thousand bales in warehouses, 1172 issued by USDA and 36,891 awaiting review. Bitterly cold weather hit the Southern High Plains yesterday backed by a steady north wind just in time for the Lubbock County Stock Show this weekend. The judging begins Thursday evening with the goat show at 6:30 p.m., then continues with steers on Friday at 2:00 p.m., followed by lambs 30 minutes after the end of the steer show. The pig show kicks off at 8:00 a.m. on Saturday morning and will likely last most of the day. Luckily for exhibitors there has not been any moisture with the change in weather. Not so fortunate for area wheat producers and those wanting to build up a little soil moisture for spring crops like cotton. In my travels across the High Plains north of Lubbock this week, I not only saw that cotton harvest was complete, but I noticed that field preparations for the new year have really gotten off to a good start after a brief rest form the intensity of a big season. High diesel prices seem to have most producers opting for reduced tillage operations to get their field ready for planting season. What will people plant? We are hearing further increases in grain acreage with milo contracts at $8.50/cwt. and higher. Peanuts are also coming back into play with offers at $500/ton and up. The FARM Assistance analysis program can help you make strategic business decisions like whether or not to lease that additional farmland or look for something to buy. 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. Sales of Upland cotton were nearly 10-times higher than the marketing year low sales figure from 2 weeks ago thanks entirely to sales of 323,600 bales to Mexico. Net Upland sales of 505,400 for the week ending January 10th are most likely what was responsible for the immediate rebound of New York futures prices last week after the limit down move on Thursday, well below the uptrend line, which appears to have spurred massive sales to Mexico. The rest of the world however seems to have just kept on the normal pace with China purchasing 37,000 running bales, Turkey 35,300, Pakistan 32,100 and Indonesia 17,000. Shipments still lag the necessary pace to meet the 16.0 million bale estimate at only 165,600 of Upland and 20,600 bales of Pima. Upland shipments went primarily to Turkey 25,100, Indonesia 22,900, China 20,600, Mexico 17,400, Vietnam 14,100 and Thailand 12,600 running bales. View Cotton Price Chart Another new life-of-contract high was set this week for both the March and December contracts on the New York Market on Monday. The March contract fell just shy of the 73-cent mark at 7296 and the December contract made it above 80 cents to 8056. Since we are at the 80-cent level that I referred to 2 weeks ago, it is time to see what the alternative pricing strategies would actually cost today. A 70-cent put is currently going for 220, an 80-cent put is 640 and a 90-cent call is 320. Therefore the simplest thing to do would be to buy 70-cent puts for 220, setting a cash floor of 6300 to 6500 depending on the quality of cotton produced this season. The more complex strategy of buying an 80-cent put and selling a 70-cent put and selling a 90-cent call would cost a net of 100. This strategy would also come with a margin requirement on the put and call which were sold. To successfully execute this strategy we need continued volatility in the market allowing the re-purchase of both the put and call when the value of each goes below 100. In other words, if the price continued to climb to about 85 cents, the put should be down to a value of 100 or less giving the opportunity to buy it back, and eliminate the risk of future margin calls. If the price were to retreat to the 70-cent level or below, the call can then be bought back for 100 or less, making the final price of the 80-cent put around 300 to 350 resulting in a cash floor price of 72 to 74 cents. Not bad when we have been selling cotton for loan price plus 2 to 5 cents equity for the past 5 years. 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. That's your South Plains cotton update for Thursday, January 17th. This is Jay Yates, Risk Management Specialist with the Texas AgriLife Extension Service. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950.

South Plains Cotton Update 1/3/08

2008-01-04T15:51:48Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday January 3rd, 2008. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. Harvest is mostly complete across the Southern High Plains of Texas today. However, the landscape is dotted with what looks like mysterious new communities with multi-colored roofs. As you get closer you realize that it's just another large collection of modules waiting to be ginned. It will most likely be another couple of months before we see the majority of all the modules gone from the fields. The classing offices in Lubbock and Lamesa, which have been staying pretty up to date with receipts from gins, have graded just over 3.5 million bales of the forecasted 5.3 million. That's about 150,000 modules waiting to be ginned. Fiber quality remains excellent with last week's average grade of color 21+, leaf 2+, staple 36.0, mike 4.1, strength 29.5, uniformity 80.7, and bark of 4.5%. Lamesa had the same to slightly higher grades with 9.0% of bales classed as containing bark. This should be the best quality crop ever sold from the High Plains. If we can just get over the sigma of being West Texas "stripper" cotton, that should translate into a higher value once the export customers start buying the crop out of the loan. USDA Loan stocks of Upland were up nearly a half million bales this week to 9,314,305. ELS stocks also increased to 233,636. Certified stocks continued their slow decline this week with 543,344 bales in warehouses, none issued by USDA and 36 awaiting review. With all the talk of record annual rainfall back in July, it is surprising to look at the West Texas Mesonet's year-end data. In an area with Dimmitt and Hart at the center and Hereford, Muleshoe, Olton and Tulia at the edges, total annual rainfall was the same or less than last year. Most locations wound up only slightly above average for the entire year. A small area around Floydada and most of the Rolling Plains received the most rain this summer. An almost complete lack of any moisture in the month of October, followed by a very dry November and December brought the annual totals back to the average line and provided for one the smoothest harvests in recent memory. 2007 Rainfall Map We are set up to have another exceptional year with just a few timely spring rains. The current drought index map shows adequate to above average moisture for nearly all the High Plains counties. With the current high price of diesel most farmers are not doing a lot of heavy tillage around Lubbock. That may turn out to be a blessing for the 2008 crop, as presently good soil moisture won't be wasted to winter evaporation. Drought Index Map The FARM Assistance analysis program can help you make strategic business decisions like whether or not to lease that additional farmland or look for something to buy. 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. Due to the New Year holiday there is no export report today. The next report will be released Friday, January 4th. I wanted to take this opportunity to point out a few facts about exports. The top 4 U.S. export customers for all of the past five years have been China, Turkey, Mexico and Indonesia. In the 2002/03 marketing year Mexico was number one at the height of the move of U.S. mills to Mexico following the adoption of NAFTA. Which, by the way, became fully enacted on Wednesday. Mexico is now number 3 and China is number 1, a position held since the 2003/04 marketing year, due to China's emphasis on increasing textile exports. Year-to-date export sales to China have risen from 750 thousand bales this time last year to over 1.6 million bales this year. Much of that came early in the season before the Asian crop began to come off. The most troubling fact about the Chinese export figure right now is the lack of outstanding sales. Current sales of cotton waiting to be shipped to China stand at 260 thousand compared to 262 thousand last year. Turkey, the number 2 customer for U.S. cotton exports, has currently received 874 thousand bales compared to 455 thousand bales last year. Outstanding sales are 304 thousand compared to 543 thousand last year. Well, we set a new life-of-contract high on the December 2008 contract on Wednesday at 7670. The uptrend, which started after reaching a low of 7111 on December 5th, continues its march toward 80 cents. I personally don't think it will make it before we have another sell-off. With that said, I believe January could offer some positive opportunities to sell old crop from the loan and maybe place a floor under at least some of the 2008 crop. After a thorough study of the grounds in the bottom of my coffee cup this morning, I believe March is on its way to one final challenge of its life-of-contract high 7145 back in July. If we get close to that, the opportunity may exist to sell some of your freshly ginned cotton without even putting it into the loan. The only current concern is that the market is currently in an overbought condition with an RSI of 70 on the March contract and 73 on the December. I look for the current uptrend in December to falter between 7900 and 7950, so that might be a good time to look at locking in a floor with the purchase of an 80 cent put combined with the sale of a 90 cent call and a 70 cent put for a net price of 100 or less, if that is the kind of marketing strategy you are inclined to. If not, then at least start a conversation with the cotton merchant of your choice when we reach 7900 about pricing alternatives they may be offering. Mar 08 Price Chart 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. That's your South Plains cotton update for Thursday, January 3rd. This is Jay Yates, Risk Management Specialist with the Texas AgriLife Extension Service. Join me each Thursday at this same time right here on Ag Talk on Fox Talk 950.

South Plains Cotton Update 12-27-07

2007-12-28T03:11:06Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday December 27th, 2007. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. Harvest continues on a stop and go basis for the few acres that remain in the fields. Most cotton is currently stored in modules, where the quality of the tarping gets tested every few days as another front preceded by high winds rolls through. There hasn't been much moisture with any of them, just wind and cold temperatures. Due to the Christmas holiday, we don't have updated classing statistics today, but I would like to take some time to look into last Friday's Lubbock quality report. Over 92% of this crop has graded color 11 or 21; 86% is staple length 35 or longer with 42% being 37 or longer. The biggest increase over the past couple of years however comes in the micronaire reading with 76% having a mike between 37 and 49 and only 12% falling in the discount range of 34 and lower. Due to the Christmas holiday there is no export report today. The next report will be released Friday, December 28th. Certified stocks are back down a bit this week with 548,490 bales in warehouses, none issued by USDA and none awaiting review. USDA Loan stocks of Upland were up slightly this week to 8,868,453. ELS stocks also increased to 222,175. The FARM Assistance analysis program can help you make strategic business decisions like whether or not to lease that additional farmland or look for something to buy. 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. With the absolute importance of China in the world cotton market it is impossible to look at the U.S. commodity markets in a vacuum. Sometimes it appears that's what some analysts want to do. I have to say however, that those I respect the most, like O.A., Mike and Carl have not fallen into that trap. O.A. mentioned on the last Ag Market Network teleconference that he couldn't get eggs for breakfast at a meeting in Dubai because they didn't have any. Reports from Pakistan, India and the Russian Federation all confirm the shortage of wheat and flour. The rest of the world is worried whether or not they will have enough basic food supplies to feed their people, not about cotton. There is plenty of cotton in the world to meet the demand, especially when people don't have enough to eat and what they can get uses up all of their disposable income. I'm not saying this to bring you down after Christmas, just to tell you to be ready. We are currently in a solid uptrend on the New York futures. Cotton is range bound by supply and demand forces outside the U.S. So, any time speculative trading and competition from the grain and oilseed complex runs cotton to the top of that range, we should be ready to sell some cotton. That's all I'm saying. Luckily, every time we approach 62 cents the Chinese step in and buy more cotton. It appears they learned their lesson well in 2003 when the panic buying caused by massive flooding, which wiped out over 22 million acres, ran New York Futures to over 85 cents. The Chinese mills have been extremely disciplined in the buying of cotton over the past few years. They known the U.S. loan program will guarantee them a supply whenever they need it. 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. That's your South Plains cotton update for Thursday, December 27th. 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 12-20-07

2007-12-20T18:41:32Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday December 20th, 2007. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. Harvest is nearly complete in the Southern High Plains as even Eddie is almost done. The rain and snow the end of last week put everyone who wasn't finished out of the field until Tuesday or Wednesday. I had a good visit with Randy Underwood Wednesday on Ag Talk while Eddie was out trying to finish up harvest. There are a lot of modules out in the fields and probably will be for quite some time. The Lubbock and Lamesa classing offices have combine to grade just over 3 million of the over 5 million bales they will likely process this year. With harvest over 85% complete that leaves over 1 million bales in modules out in the fields. That's job security for module truck drivers. The Lubbock classing office has graded 2.3 million bales and Lamesa is just over 700,000. The average grade remains excellent at color 21, leaf 2, staple 36.0, mike 4.1, strength 29.6, uniformity 80.7 and only 1.5% bark. The grades at Lamesa are virtually the same with only slightly higher bark percentage at 3.9%. Lamesa has started to edge up some on bark as the weekly percentage is up to 4.7%. Recent daily bark numbers at Lubbock have also increased to 3-4%. As more post storm bales come into the classing office, the numbers will likely continue to rise. However, a tremendous amount of this crop was harvested under ideal conditions. The FARM Assistance analysis program can help you make strategic business decisions like whether or not to lease that additional farmland or look for something to buy. 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. Easy come, easy go. As prices rise, export sales fall again. Net Upland sales of 133,700 running bales were down 62 percent from the previous week and 49 percent from the prior 4-week average. The major buyers were Pakistan (30,900), Indonesia (14,500), Turkey (13,800), China (12,600), Guatemala (10,700), and Thailand (8,900). Net sales of 6,100 for delivery in 2008/09 were mainly for Colombia (5,300). Exports of 150,200 were 45 percent below the week earlier and 28 percent under the prior 4-week average. The primary destinations were China (40,400), Turkey (29,600), Mexico (18,900), Indonesia (16,500), and Thailand (9,700). Net American Pima sales of 24,600 were primarily for Pakistan (10,600), India (8,700), Turkey (2,200), and Portugal (1,800). Exports of 20,300 were mainly to India (7,700), Pakistan (6,900), China (2,100), Germany (1,300), and South Korea (1,000). Total shipments of 170,500 were slightly more than half of the 318,000 running bales needed each week for the rest of the year to meet the current USDA estimate of 16.2 million 480-pound bales. Certified stocks were back up slightly for the week with 557,257 bales in warehouses, 706 decertified, 545 issued by USDA and only 41 awaiting review. USDA Loan stocks of Upland cotton increased over 1 million bales this week to 8,678,773. ELS stocks also increased over 50,000 bales to 195,110. The rise and fall of export sales in direct opposition to nearby futures reveals what an uneasy balance we have between supply and demand in the cotton market right now. Every time the price of cotton dips, foreign mills step up their buying. As cotton prices rise on strong exports and competition from wheat, corn and beans, the export sales dry up. There is a lot of talk of next year's plantings being only slightly higher than 9 million acres, with less than 15 million bales of total production. With usage the same as this year that would leave the U.S. with a record low carryover. But, if prices rise to compete for acres with grain, exports will drop off, increasing the carryover back to an average range. Maybe now you understand why we are range-bound in cotton. The other reason is that whatever happens in the U.S. with cotton is becoming less and less important as India will surpass this country as the number 2 producer when the final harvest tally is complete for this season. As much as I hate to say it, the best strategy for marketing this year's crop appears to be to put it in the loan until the rest of the world runs out of cotton and has to turn to the U.S. as the supplier of last resort. I have been reading a lot about the WTO ruling this week and I just can't understand how the world's residual supplier is supposed to have so much negative impact on the price of cotton in Brazil and West Africa. I guess that's why those guys get the big bucks and I am just an Extension Program Specialist in West Texas. As far as the '08 crop is concerned, I think this will definitely be the year to have a brokerage account set up and ready to go to use a futures strategy to lock in an "in-your-pocket" price of 70 cents or better. As competition for acres heats up, there should be some unique opportunities to lock in the best price in years. 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. That's your South Plains cotton update for Thursday, December 20th. Feliz Navidad y prospero Ano Nuevo. Have a merry Christmas and a prosperous new year.

South Plains Cotton Update 12-13-07

2007-12-13T20:19:12Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday December 13th, 2007. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. This week I listened to a presentation by Dr. Brent Bean about how wheat yields could be reduced by as much as 40% on wheat planted the first week of December. That would include dry planted September wheat that got its first rain Tuesday morning, like mine. The rain will be a big boost to all the irrigated wheat that has been nursed along to this point. I bet your wondering why a cotton market update starts out talking about wheat conditions. The condition of wheat on the High Plains north of Lubbock has everything to do with how much cotton will be planted in that area next year. As I stated last week, nobody knows at this point just how much wheat was planted behind this year's fall harvested crops, but it was substantial. Timely rains this winter will mean more wheat taken to grain harvest, which does not leave enough time to grow cotton on that ground next year. The other thing about Tuesday's widespread rain that came from a thunderstorm in 36 degree weather is that it should refill that top 6 to 8 inches that had dried out, leaving us with a full profile going forward. A couple more timely rains like that between now and cotton planting time could set us up for another top 5 yield. The crop report also came out Tuesday and the Texas High Plains, as represented by TASS districts 1-N and 1-S, remained at 5.3 million bales from 3.02 million harvested acres. That translates into the second largest crop in history and a record 842 pound overall average yield, 1040 in 1-N and 799 in 1-S. The Lubbock classing office has graded over 2 million bales and Lamesa is just over 600,000. The average grade remains excellent at color 21, leaf 2, staple 36.0, mike 4.1, strength 29.6, uniformity 80.7 and only 1.4% bark. The grades at Lamesa are virtually the same with only slightly higher bark percentage at 3.7. Significant progress was made on harvesting this crop last week as the percent harvested increased from 76% the prior week to 82% the week ending December 7th, just before the front moved in. We won't see much progress in the next report since the recent storm dropped more than half an inch of rain across 39 of the 51 West Texas Mesonet sites. If 82% of the 5.3 million bales have been harvested and only 2.6 million has been classed, that means there are 1.75 million bales in modules out in the fields. 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 355,000 running bales were up 62 percent from the previous week and 69 percent from the prior 4-week average. The major buyers were China (88,500), Indonesia (65,000), Turkey (39,700), Pakistan (37,700), Thailand (26,300), and Mexico (25,400). Net sales of 12,300 for delivery in 2008/09 were mainly for Mexico (10,100). Exports of 273,200 were 29 percent above the week earlier and 48 percent over the prior 4-week average. The primary destinations were China (93,400), Turkey (62,700), Mexico (29,400), Indonesia (16,900), Thailand (13,800), and Vietnam (11,800). Net American Pima sales of 12,300 were primarily for Pakistan (5,000), India (3,300), Peru (1,300), and South Korea (1,000). Exports of 15,400 were mainly to China (4,900), Peru (2,800), Pakistan (2,700), India (2,100), and Germany (1,600). Total shipments of 288,600, although much improved, are still well below the 314,000 needed each week to reach the current 16.2 million bale USDA estimate. This is where I have to admit that I was wrong last week. The new USDA Supply/Demand Estimate came out Tuesday and exports remained unchanged and as previously mentioned the Texas High Plains estimate also remained the same as last month. I still believe that the export number will likely drop some more in the future. Certified stocks declined for the week with 555,247 bales in warehouses, 101 decertified, 2,276 issued by USDA and 5,175 awaiting review. USDA Loan stocks of Upland cotton increased another 600 thousand bales this week to 7,676,475. ELS stocks also increased to 141,333. The March '08 contract surprisingly closed up 215 this week at 6525 compared to 6310 last Wednesday. The Supply/Demand Estimate must not have been quite as bearish as was anticipated. It also didn't hurt that the fed cut interest rates another quarter percent and wheat, corn and beans were all up substantially. The improved export sales number also reveals at what price level foreign mills are willing to step up and buy more cotton. Price Chart The Ag Market Network conference call was this morning and if you missed it you can go to the website and listen when you have some time. Peter Egli was the guest speaker this month and the full panel of Mike Stevens, Carl Anderson and O.A. Cleveland joined him. The general consensus was optimistic for price over the next year, but the elephant in the room nobody likes to admit is there is the fear of recession. Peter Egli made the comment that "we are already in a recession if we just pick the right numbers to look at." They also emphasized a point I have made here about the '07 crop if you haven't already sold it. Put it in the loan and watch for any technical run-ups to unload it for 3 cents or better equity. The '08 crop looks to have a lot of potential to rise and a floor pricing strategy should be considered. To recap the price range projected by the panelist for the December '08 contract; Egli 71-85, Stevens 71-80, Anderson 72-78 and surprisingly bearish O.A. Cleveland 71-75. If O.A. is right and the quoted Goldman Sachs forecast of $14 beans and $5.50 corn is right, we may have the only cotton in the U.S. all within 200 miles of Lubbock. 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. That's your South Plains cotton update for Thursday, December 13th. 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 12-6-07

2007-12-06T19:57:42Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday December 6th, 2007. Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center. As the price of cotton continues to slide in the face of record high wheat prices, I continue to get reports from the field that many producers are following their cotton harvesters with wheat drills. The window of opportunity is almost over for that to continue. However, the continued lack of adequate moisture will leave us guessing for quite some time as to just how much wheat we will actually have to take to grain. If it starts raining or snowing in December, we could have a major reduction in cotton acreage again next year. If it stays dry and the wheat fails, I look for the same cotton acreage next year as this year. Drought Index We are also getting a lot of questions about soybeans in the counties north of Lubbock. Good peanut prices already being offered for next season will also shift some acres out of cotton from Lubbock south. The other factor affecting planting decisions for next year will be fertilizer prices. I didn't think it was possible, but nitrogen prices are 75% higher than this time last year and phosphate has doubled. We are going to have to take a hard look at the marginal cost/return of fertilizer for $4 corn, $9 wheat and $11 beans versus 63-cent cotton. The Lubbock classing office is currently checking grades on over 300,000 bales per week. Currently standing at 1,786,764 bales classed as of December 5th, with the Lamesa office at 533,977. The average grade is still color 21, leaf 2, staple 35.9, mike 4.1, strength 29.6, uniformity 80.7 and only 1.5% bark. The grades at Lamesa are virtually the same with only slightly higher bark percentage at 3.3%. We won't see a significant increase in bark due to the wet weather for quite some time due to the fact that many gins won't get to the cotton harvested after Thanksgiving until late January or February. Statewide, 4.12 million bales have now been classed. 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 219,400 running bales were down 12 percent from the previous week, and at the bottom end of the industry estimate of 200-300 thousand. The major buyers were China (42,100), Mexico (35,600), Indonesia (31,700), Turkey (29,100), Thailand (18,600), Brazil (14,100), and Japan (11,500). Exports of 212,300 went to China (62,800), Turkey (48,200), Mexico (33,000), Indonesia (12,200), and Pakistan (9,700). Net American Pima sales of 9,900 were primarily for Pakistan (3,100), India (3,100), Peru (2,200), and Taiwan (1,600). Exports of 21,600, a marketing-year high, were mainly to Taiwan (4,500), Pakistan (4,200), India (2,800), Indonesia (2,500), and Thailand (1,800). Total shipments of 233,900 running bales is still significantly short of the 300 thousand plus bales per week needed. The current pace of exports would indicate a final tally of just over 15 million bales as opposed to the current estimate of 16.2 million bales. The next forecast is due from USDA on Tuesday, December 11th. Given the weak export numbers we have had in November and the fact that the market has already been on the decline, I would anticipate another drop in estimated exports coupled with further increases in the size of the Texas crop to combine for an even larger US carryover. Certified stocks declined yesterday with 592,967 in warehouses, due to 2,640 bales being decertified. Stocks are up compared to last week. There were also 1,993 bales issued by USDA and 8,029 awaiting review. USDA Loan stocks of Upland cotton increased over 700 thousand bales this week to 7,032,616. ELS stocks also increased to 124,025. The nearby March '08 contract is currently trading on the expectation of a bearish World Ag Supply/Demand Estimate due out next Tuesday, December 11th. If the report is as expected, there will likely not be any further market reaction than what has already been built in. A surprise would have to come in the form of unexpected bullish news. Price Chart To listen to a full analysis of the report and commentary by top cotton market experts, come to the Posey Gin on Thursday, December 13th. Peter Egli of Plexus Cotton Limited will join the regular panel of Dr. Carl Anderson, Dr. O.A. Cleveland, Mike Stevens and Pat McClatchey for the monthly meeting of the Ag Market Network. I'm sure a lot of the talk will surround December '08 and what to do with next year's crop. However, many people still want to know what to do with this crop. First, take advantage of the one-month storage you will automatically be charged regardless of what the final disposition of your cotton is. If we haven't seen a substantial rise in equity offers by then, consider moving it to the loan. There will be pressure on prices to rise in the spring to compete for more acres, but since prices are already high enough in much of the world to encourage increased cotton plantings; don't expect it to be dramatic. The US will likely continue to lose market share next year. Second, consider the tax consequences of your marketing options. Much of this crop will not be in a bale until well after the first of next year. With last year's short dryland crop many producers could be left with little to no income this calendar year. Some type of minimum price contract for cotton still in modules with the option of taking an advance before the end of the year could also help smooth out the tax burden and avoid a wreck next year. 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. That's your South Plains cotton update for Thursday, December 6th. 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 11-29-07

2007-11-29T19:56:34Z

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.

South Plains Cotton Update 11-15-07

2007-11-15T20:08:33Z

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.
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 11-8-07

2007-11-08T21:15:40Z

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 10-18-07

2007-10-18T22:01:59Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday October 18th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.
The World Ag Supply/Demand report which came out on Friday held no great surprises for the cotton market. I won't go over all the numbers again, since I'm sure all of you have had ample opportunities to hear them before. The key items in the report however were that the US export number remained unchanged, US production was raised (entirely out of West Texas production), and the world carryover was increased, resulting in a stocks-to-use ratio of 42.5% compared to 40.4% last month. If you listened to Mike Stevens on his report last Friday or on the Ag Market Network, then you already know that all the increases in world production, use and carryover can be traced directly back to China.
The market responded to the news pretty much as one would expect without any major reaction. December '07 has trade in a 3-cent range from 62 to 65 for the entire month of October. View Dec 07 price chart Yesterday's close was 65 points lower than the previous Wednesday, but both were right in the middle of the range. If we continue this trend much longer, we will see a convergence of the 9, 18 and 40-day moving averages. The last time that happened was August 10th right before the 6-cent decline over the next 7 days. I'm not saying that's what I think is about to happen, but be ready to act on any action that breaks out of the 62 to 65-cent range. A similar range between 71 and 74 has bound December '08 for the month of October as well. Go back and listen to the recording of the Ag Market Network to hear Mike's suggestion for how to buy December '08 options for a reasonable cost. If this market moves out of this range to the upside we might want to consider using that strategy to buy 75-cent puts.
Total cotton shipments of 251,900 is still about 50,000 bales short of the amount needed to meet the USDA estimate of 16.7 million bales, which is unchanged from last month's forecast. Net Upland sales of 158,500 running bales were primarily to Turkey (58,100), China (22,900), Indonesia (20,500), Thailand (10,400), and Hong Kong (10,300). Exports of 246,600 were mostly shipped to China (104,300) Turkey (38,700), Mexico (26,500), Indonesia (16,000), and Taiwan (10,200). Net American Pima sales of 10,300 were primarily for Switzerland (7,000), Pakistan (900), Egypt (900), and China (700). Exports of 5,300 were mainly to China (2,200) and Pakistan (1,400).
Certified stocks continued to build this week with 596,240 in warehouses, 7,278 bales issued by USDA and 37,327 awaiting review. USDA Loan stocks of Upland cotton increased 389,246 bales to 912,756, while ELS stocks decreased 1,383 bales to 22,181.
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.
County Ag agent reports from last week indicated that defoliation was in full swing, with harvest just getting underway. As quickly as the harvest aids are doing their job, under the ideal weather conditions we have had, we can now say that harvest is in full swing across the area. Most gins are staying caught up with the strippers right now, so we don't see lots of modules on the ends of the fields, but farmers I have talked to say yields have been better than they estimated before starting. High winds across the area yesterday slowed things down a bit, but the current 15-day forecast has nothing but sunshine and more wind. If you guessed yesterday for the first freeze, you lost. Looks like the next best chance will probably be right on the average of November 1st in two weeks.
Responding to a question about compliance with the WTO related to the cotton program, Senator Harkin had this response, "Hopefully in the next few years, areas of the country that are planting cotton will begin to shift their crops and begin to grow other things." Listen to Harkin comment about cotton Maybe my next big economic analysis should be on the "Economics of Converting a Cotton Gin into a Cellulosic Ethanol Plant."
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.
That's your South Plains cotton update for Thursday, October 18th. 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 10-11-07

2007-10-12T03:50:53Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday October 11th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.
A rally in the grain markets and concerns over too much rain during harvest in China have helped to boost the cotton market this week. December '07 twice bounced off the 38.2% retracement line at 6223 and was able to stay above the 40-day moving average while trading significantly below the shorter-term moving averages. For the week the contract was up 78 points to finish on Wednesday at 6421.View price chart After the big drop last week the support levels held and the market has turned around in the face of the latest USDA Supply/Demand report due out on Friday. Average trade estimates are for a U.S. crop of 17.94 million bales. The range is between 17.61 million and 18.1 million. Ending stocks are expected to increase from 6.2 million last month to an average estimate of 6.36 million this month. Locally, we are expecting the High Plains crop to increase another 200,000 bales to about 4.7 million. I guess that would mean that all the increase for the U.S. would come from the High Plains of Texas. Last night's hail storm may reduce that number somewhat. Luckily we don't think it covered a large percentage of the acreage. Pictures of the damage are available in the online version of this newsletter at myspace.com/jayates85.

No export sales were reported this morning due to the Columbus Day Holiday on Monday. Don't expect big sales numbers as the first part of the reporting period was during a period of higher prices. My calculations indicate that there needs to be just over 300,000 bales of shipments to stay on track with the current USDA estimate of exports.
Certified stocks continued to build this week with 563,549 in warehouses, 3,786 bales issued by USDA and 56,501 awaiting review. USDA Loan stocks of Upland cotton increased 141,460 bales to 523,510, while ELS stocks decreased to 23,564.
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 dramatically this week as fields rate Good and Excellent rose 5.1% to 58.3%. Fields rate Poor and Very Poor also declined 1.5% to 13.8%. Agents also reported that 60% of fields had bolls opening compared to 37% last week. Lubbock, Mitchell and Yoakum Counties all reported a small number of fields that had been harvested as of last Friday. A tour of the area earlier this week revealed many fields defoliated and ready for harvest. The Lubbock Classing office began reporting numbers of samples graded this week. The Lubbock office has graded 2230 bales so far this season with the predominant grade being color 21, leaf 2, staple 34 and a mike of 4.2. Lamesa has received some samples, but not enough to report numbers.
Heat unit accumulation for the season appears to have wound up being adequate after a shaky start to the season.View heat unit graph Another 83 heat units over the next 15 days should make the harvest aides, which are going out in full force this week, continue to work exceptionally well. The best chance for a light frost is for next Wednesday with a forecast low of 39 for Lubbock.
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. with featured speakers Carl Anderson, O.A. Cleveland and Mike Stevens.
That's your South Plains cotton update for Thursday, October 11th. 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 10-4-07

2007-10-05T13:34:14Z

South Plains Cotton Update on Ag Talk on Fox Talk 950 for Thursday October 4th, 2007.
Jay Yates, Extension Risk Management Specialist at the Lubbock Agricultural Research and Extension Center.
We are living in interesting times. Our actions in these markets make that statement either a blessing or a curse as the supposed Chinese saying goes. December '07 cotton fell 252 points this week, mostly on Friday after posting the uptrend high of 6740 on Thursday. I had a bad feeling about what was about to happen Friday morning after hearing the merchants who attend the Plains Cotton Advisory Group say that higher prices had dried up all sales activity for the week. Sure enough, the market opened about even, and then proceeded to drop as much as 200 points during the day. It could have been worse. The grains were limit down across the board on Friday.See price graph Yesterday the slide appeared to stall at the 38.2% retracement level of 6223 as the RSI shifted to overbought, so there is hope that the recovery may begin today. That just goes to show how much cotton is being supported by high grain prices in the face of bearish fundamentals. The need to not lose too many more acres to grain could limit the downside in cotton, especially for December '08 and the spread with July '08. However, the December '07 contract will become more and more vulnerable as expiration approaches if export sales don't start to pick up and meet USDA estimates.
Total export sales were a meager 103,400 running bales. However, that level was no surprise to the trade, which was expecting 80-100,000. Net Upland sales of 100,800 bales were 25 percent below the previous week and 42 percent under the prior 4-week average. The major buyers were Turkey (47,700), China (18,000), Indonesia (10,000), and Mexico (7,100). Exports of 258,000 were 1 percent below the week earlier and 2 percent under the prior 4-week average. The primary destinations were China (106,400), Mexico (26,700), Turkey (25,600), Indonesia (19,400), Thailand (15,800), South Korea (12,600), and Taiwan (11,200). New sales of American Pima were only 2,600 with shipments of only 2,200. The biggest buyer was India (1,200) and China received the most shipments at 800 bales. Total exports of 260,200 were well short of the 300,000+ bales needed each week.
Certified stocks continued to build this week with 526,656 in warehouses, 6,468 bales issued by USDA and 47,568 awaiting review. USDA Loan stocks dropped to 382,050 bales of Upland and 42,209 bales of ELS, a combined loss of 175,682 from the previous report.
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, continue to improve slightly as we approach the end of the growing season. Fields rate poor to very poor declined 0.5% to 15.3% and those rated good to excellent remained unchanged at 53.3%. Agents also reported that 37% of fields had bolls opening. While no fields were reported as harvested for the week ending September 28th, the USDA-AMS Classing office in Lubbock began grading samples of cotton from the local area on Monday, October 1st. Word has it that the small quantity coming in is from only 2 gins, therefore the classing office does not report the number of bales to protect confidentiality. Abilene has been receiving cotton for the past couple of weeks. The average mike of 4.2 at first glance would seem to be pretty fair until you consider that early cotton at Abilene would normally be dryland that got too hot and dry at some point in its life and would be high mike. We'll just have to wait and see.
We have had another week of remarkable heat units again this week, with the graphs, which would normally be flattening out at this time of year, actually increasing their upward slope.See heat unit graph The last 7 days have seen 110 DD60's added to the crop in Lamesa, 93 in Lubbock and 78 at Halfway. The 15-day forecast for Lubbock calls for an additional 145 units to be added to this crop before it is all said and done. The fat lady has not yet begun to sing. As a matter of fact I don't think you can even hear her warming up off stage. That brings me to my last point. Everyone was surprised by the big increase in the High Plains crop estimate last month. Early indications are that the projected crop will grow even more in the new estimate, which comes out October 12th. We are headed for an unbelievable finish on the South Plains if we can just avoid severe weather. A small number of acres were lost last week due to hail. While devastating for the individuals losing a crop this late, it was very minimal in the scope of the whole crop.
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. with featured speakers Carl Anderson, O.A. Cleveland and Mike Stevens.
That's your South Plains cotton update for Thursday, October 4th. 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.