July 2, 2021

• NASDAQ Composite and S&P 500 Make All Time Highs
• Export Shipments at 284,400 Bales
• Crop Progress Report Shows Increase in Squaring
• USDA Planted Acreage Survey Shows 11.719 Million Acres Planted to Cotton

During most years, welcomed rains in West Texas and increasing chances of rain can drop the market significantly. This past Friday, Monday, and Tuesday was an exception to the rule, with December futures closing up 45, 25, and 15 points respectively. Wednesday was a different story and a head scratcher, as the Acreage Report was in line with most analyst’s guesses, but December futures closed at 84.90 cents per pound, down 268 points on the day. December bounced back some on Thursday with a close of 85.90 cents, leaving the contract down 83 points for the week. Volumes picked up Wednesday and Thursday after the Acreage Report survey release. Open interest climbed 9,083 contracts from Thursday of last week to 217,240 contracts.

Outside Markets

The NASDAQ Composite and S&P 500 stock indices made fresh all-time-highs this week on the backs of technology stocks. People filing for unemployment benefits fell to a post-pandemic low 364,000 last week from 415,000 the previous week. Data continues showing the U.S. economy is growing rapidly and second quarter earnings prospects are expected to be good. Oil prices which began the year under $50 a barrel have now climbed to $75. Unfortunately for commodity exporters, the U.S. dollar continues marching higher.

Export Sales

Net Upland Cotton export sales consisted of 42,600 bales of cotton for the 2020/21 marketing year, and 133,900 bales for the 2021/22 marketing year which begins August 1. Pima sales included 2,200 bales for the 2020/21 marketing year and 100 bales for next marketing year.  Shipments totaled 284,400 bales. Shipments for the remaining weeks of this marketing year will need to average about 312,000 bales to reach USDA’s projection.

Crop Progress and Weather

Monday’s Crop Progress and Condition Report showed squaring increased 11 percentage points across the belt for the week ending June 27, climbing from 21% to 32%. Cotton squaring for Texas and Kansas was 29%, while Oklahoma was 11%. Crop conditions across the Southwest region remained fair to good, but recent widespread rains across West Texas, Oklahoma, and Kansas have helped to lift crop production expectations from pessimistic to cautiously optimistic.

Planted Acreage Survey

USDA’s Planted Acreage Survey for all cotton reported 11.719 million acres planted to cotton (11.577 million Upland and 142,000 Pima). Planted acres were 317,000 acres below the March Planting Intentions of 12.036 million acres, and 374,000 acres below 2020 crop planted acres (12.093 million). The Southwest represented the largest overall year-on-year decrease of 194,000 acres.  

The Week Ahead

West Texas weather will continue to be a focal point for global traders and analysts trying to fine tune production estimates. Otherwise, there is little cotton specific information for the next few weeks outside of weekly Crop Progress and Condition and Export Sales reports. 

In The Week Ahead:

• Friday at 2:30 p.m. Central – Commitments of Traders
• Tuesday at 3:00 p.m. Central – Crop Progress and Condition
• Thursday at 2:30 p.m. Central – Cotton-On-Call
• Friday at 7:30 a.m. Central – Export Sales Report