John Robinson
I have never seen a more mixed-up unfolding situation as with the new crop cotton market. Consider the following.
Pre-plant crop prices strongly suggested that 10 million or fewer U.S. cotton acres would be planted in 2023. There was anecdotal evidence from Texas, the Delta, and the Southeast to reinforce this expectation. Yet all the early spring prospective/intentions surveys reflected 11-something million. Hmmnnn.
How much of the intended cotton plantings will get harvested is a wide-open question. Why? The lingering La Niña drought doubtless caused some prevented and/or failed acres in the Southern Plains region. This was then followed in the late spring with a year’s worth of rain in a month’s time. And flooding. And hail. The latter also probably caused some prevented and/or failed acres in the Southern Plains region. I doubt that USDA’s June 30 Planted Acreage report will resolve this uncertainty.
Since the rainy period, the issue in Texas has shifted to searing heat. What might have been decent emergence and development in the dryland areas of northwestern Texas is now less certain. Likewise, the Gulf Coast crop could be negatively impacted during its blooming and boll setting.
The impact of all this is that the U.S. cotton crop may be only 15 million bales instead of the 16.5 currently forecasted by USDA. However, that question won’t be cleared up before August or September. And until then, speculators will likely jump on a bandwagon and buy ICE futures higher.
These volatile weather markets fluctuate a lot. If Dec’23 futures makes a run towards the 90s, I would view it as an opportunity to do some selling or hedging. Remember that last year Texas had 75% abandonment and yet Dec’22 ICE futures settled back down into the 80s from October onward.
For additional thoughts on these and other cotton marketing topics, please visit my weekly on-line newsletter at http://agrilife.org/cottonmarketing/.
Source: farmprogress.com