July 11, 2012
Marginally lower world stocks were projected by USDA in the supply/demand report. However, the world surplus of cotton continues to hang heavy over the market price. Demand remains sluggish. Therefore, the projected range for average farm price this season was unchanged at 60 to 80 cents per pound.
The U.S. 2012/13 cotton estimates reflect slight revisions that result in lower ending stocks of 4.8 million bales. But, that is up sharply from 3.3 million the season before. Estimated exports for the 2012/13 season were raised 300,000 bales to 12.1 million because of reduced foreign competition.
World cotton stocks were lowered slightly due to fewer beginning stocks and lower production than last month. Yet, world consumption was unchanged.
In all, world carryover stocks for the 2012/13 season were reduced marginally 2.0 million bales for a surplus stocks-touse (s/u) ratio of 66%. That compares to a 43% s/u ratio for the 2010/11 season.
The December ’12 futures price for the last month has traded mostly within a two-cent range above and below 70 cents per pound. The relatively stable price indicates the market is willing to buy and sell physical 41-4-34 quality cotton in the 60 to 70 cent range.
Unfortunately, a farm price below 70 cents per pound does not cover the full production costs.
Weather conditions as of July 9th have not been favorable for Texas cotton. A substantial amount of the 6.8 million acres planted has already been abandoned. Dryland cotton is stressed as most of the State is under moderate to severe drought.
The Crop Condition Report for July 9th rates Texas cotton as 24% very poor or poor, 41% fair, 31% good, and 4% excellent. The Texas Condition Index reported by USDA is 62% versus only 35% a year ago.
Of the 6.8 million acres planted in Texas, the irrigated acreage is around 2 to 2.5 million. The irrigated crop is progressing well. But, hot, dry conditions have either destroyed or set back much of the dryland crop from the Coastal Bend to Southern High Plains areas. Favorable rains tend to be isolated to local regions. However, the irrigated and some dryland acreage could improve with timely rain in late July and August. Abandonment of Texas cotton acreage might be around 30%.
Weather conditions across the mid-South and Southeastern cotton regions have been mixed. The U.S. crop, at this time, appears to be in the 15.5 to 17.5 million-bale range, compared to the 15.6 million bale harvest last season.
Ag Market Network Teleconference, Date: July 27, 2012 Time: 7:30 a.m. Central Time
New York Cotton Market Roundtable: A distinguished panel of cotton experts will discuss today’s cotton market, including: crop conditions, domestic demand, exports and farm policy. O.A. Cleveland, Carl Anderson, Jarral Neeper, Mike Stevens, and Patrick McClatchy
Special Guest Speaker: Joe Nicosia, CEO, Allenberg Cotton
The conference will be aired live over radio station KFLP 900 AM Floydada, Texas and KZIP 1310 AM Amarillo, Texas. You can listen live over the internet at www.AgMarketNetwork.net. You can listen to a recording around noon at www.AgMarketNetwork.net.