Caught within an extremely narrow trading range and boosted by a very friendly export sales report, cotton prices moved higher in New York at week’s end. Volume had turned slight and in the absence of spread trading had almost come to a standstill. Yet, the cowboy stampede came out on Friday with triple digit trading and triple digit closes and took the nearby May contract above 60 cents. The activity breaks down a bit of the bearish overtone in the market, but only in the short run. The longer term bearish view continues to exist. The market is not likely to turn its direction to the 2016 crop just yet, but it is a bright star in the East shines for now. Likely, there is only a very limited amount of upside potential at this juncture. Yet, it does point out the very strong demand for good quality cotton and the rapidly declining availability of such. Premium offers to growers for SM (strict middling) and M (middling) continue to advance and have some further topside growth. Too, a minimum staple length of 35 is required with 36 and above desired. Hopefully the downside support at the 54-55 cent level is a relic and growers can find price support in 56 cent area. Yet, you are reminded that if you hold premium quality cotton, the market is and will continue to pay “real” money for such.
The export market was a significant player on the week as net weekly U.S. sales totaled 210,900 RB of Upland and 13,200 RB of Pima. Upland Sales for the 2016-17 marketing year were only 28,000 bales (lower than expectations given that New York was under 59 cents). Another 700 bales of Pima were sold for 2016/17 delivery. Nevertheless, total sales across all years climbing above 250,000 bales, was very impressive. There are no ifs ands or buts about it. Very impressive, maybe even enough for USDA to increase its export estimate 200,000 bales in next week’s April supply demand release. Yet, sales should approach such levels with the New York ICE old crop contracts trading at 59 cents and below. Primary upland sales had the big names with the leading buyers being Vietnam, China, Turkey, South Korea and Pakistan. Pima sales were primarily to China, India and Germany.
Export shipments graded out with an A++ as well, establishing a marketing year high at 331,400 RB of Upland and 12,700 RB of Pima. Destinations for Upland included the same countries; China, Vietnam, Turkey, Pakistan and Indonesia. Primary Destinations for Pima were China and India.
There can be little question that the price rally was tied to the report and the shortage and high quality cotton. The major portion of the rally was associated with the old crop contracts. Too, this is not surprising in that most of the Asian mills, and all of the Chinese mills, have been operating with minimum inventory due to the uncertainty of the Chinese export/no-export policy.
USDA’s week old March plantings intentions report continues to draw attention. We like the number as we have stated. I was late in recognizing that cotton growers were, if fact, returning to cotton in a big way. It was February before I caught the trend. Yet, with improved equity offers from merchants, increased rebates from ginners; especially farmer owned gins, as well as the realization of the yield potential of cotton following several years of corn, it simply made sense to growers. Growers are looking for big yields. However, they may have attempted to cut their seed costs too much and may not be using some varieties that promote big time yields.
Staying with 2016 plantings, two states in the Midsouth promise much more than USDA projections, Tennessee and Missouri. In fact, Tennessee acreage could exceed 260,000 acres, significantly higher than the USDA estimate. I have yet to pick up the 45 percent increase in Mississippi, finding it closer to 35 percent. Yet, I find both South Carolina and North Carolina acreage up compared to last year while the USDA report has them down. Normal activity from Mother Nature across the Cotton Belt, coupled with the improved yields of cotton behind corn, could bode well for the grower’s sight pocketbook. Yet, I do hope growers don’t scrimp on seed.
We had the big grand slam last week with our demand comments and using Adidas as an example. I was misquoted more last week than I have ever know in my life…even after I corrected one individual they continued to carry on with the misquote. As the World Turns, These are the Days of Our Lives. Drama, Drama, Drama
For the record I am neither anti BCI or Adidas. For the record I am into cotton. BCI has admirable goals. On the surface, they seem to want to bully the U.S., arguably the most environmentally conscious agriculture producer in the world. It appears that some of its founders do not anything that uses any chemical. Maybe they need a bit more “natural water” to get their system adjusted. Staying with Adidas their products are found in two locker rooms that I have access. The Mississippi State and Texas A&M locker rooms are chuck full of athletic sportswear bearing the name Adidas. Beautiful Stuff…All Maroon and White, a lot like Heaven I imagine. NEARLY ALL, not all, A VAST VAST MAJORITY have the following phrase on each item…100% polyester. Some, but only a limited number have the phrase 65% polyester 35% cotton. My guess, well more than 75 percent of the items are 100% polyester. I did not personally go to the other locker room. A young lady that calls me DAD did that one for me. I reminded that cotton had paid her way and her DAD needed help. She totally and completely concurred with what I found in the locker room I viewed. Additionally, she went through her husband’s closet and he had 31 items that came from the respective university athletic department. Oh, her husband is titled Assistant Head Coach. She told me her husband brings home 5-6 new items every month and they all are polyester. She said he had only one cotton T shirt. She said he could not get cotton athletic apparel, saying it was all polyester. A university athletic employee told me they wanted cotton, but Adidas said they could not get it. Ah!! Mississippi State and Texas A&M meet in mortal combat on the baseball diamond a week from today. That place will be packed with 100% polyester. The winner will get the Polyester Cup, in beautiful Maroon and White of course.
I know little about Adidas, but I do know two customers that feel Adidas does not want to provide them anything cotton. I know that their written policy is to use 100% BCI cotton by 2018. Let’s see that is two more crop years away and the U.S. produced only 183,000 bales of BCI cotton in 2015. None-ZERO in Mississippi and about 30,000 bales in Texas. Thus, you can bet there will be little if any maroon and with dyed cotton used by those two “cotton” colleges in the coming years—any U.S. cotton that is. Too, both of the aforementioned mentioned university customers emphatically stated to me that they want cotton and do not like the polyester. The comment was that polyester is not comfortable. I have not heard that in a long time, but I use to hear it every day sponsored by Cotton Incorporated, the company that once used another daily slogan, “The fabric of our lives.” Young folks do not know that one anymore.
Thus, to those that continue to find pleasure in misquoting me, no problem. I was born getting a whipping and suppose I will go out that way. However, please support the American cotton grower and the world cotton grower, forget me. Get the message to the world that it is okay to wear cotton, that it is okay to support the cotton grower. All of us PhD’s lawyers, ginners, warehousemen, cooperatives, chemical companies, seed companies, input suppliers, media, big shots, Board Directors and speech givers; WE work for the cotton farmer. HE pays for our living. He takes financial risks. We talk about risks. We run off at the mouth. Sometimes they do to, but they have a financial and emotional investment that we will NEVER understand. Direct all your energy toward helping them, not trying to reduce the importance of another. God Bless the American Cotton Grower and all of you. We give thanks to the grower for our livelihood. We live off their backs. We life off their emotions. Support Them. Forget the Petty Stuff.
Give A Gift of Cotton Today………Make that 100% cotton…..Adidas 100% cotton…it can even have Ole Miss on it as long as it in that new baby blue and pick uniform they wear.