Drought takes toll on traditional source of early new-crop supplies. Growers in Rio Grande Valley planted only 80,000 acres. Isolated thunderstorms forecast for Texas Plains.
Cotton futures settled higher on light volume Friday as nearby contracts finished above the prior dayΆs highs.
Benchmark July gained 102 points to close at 84.25 cents, near the high of its 102-point range from up nine points at 83.32 on the opening overnight to up 125 points at 84.48 cents.
Maturing May closed up 92 points to 82.25 cents and December edged up 30 points to 83.58 cents. December closed just above the midpoint of its 90-point range after hitting a new low for the move at 83 cents.
The market lost ground for the fourth week in a row, dropping 123 points in May, 111 points in July and 159 points in December.
Volume slowed to an estimated 14,500 lots from 16,688 lots the previous session when spreads totaled 3,545 lots or 21% and EFP 51 lots. Options volume totaled 4,056 calls and 3,256 puts.
Cotton prospects in TexasΆ Lower Rio Grande Valley, traditional source of the nationΆs first new-crop supplies, are pointing to one of the areaΆs smallest outputs on record.
ThatΆs the assessment of specialists at the Texas A&M AgriLife Research and Extension Center in Weslaco quoted in an extension report.
“To begin with, our estimations are that growers have planted only 80,000 acres of cotton,” said Danielle Sekula, an Extension Service integrated pest management specialist.
This compares with an average of 150,000 acres planted the last three years, she said, and 220,000 acres planted between 2004 and 2006. This year could rival 2009 when only 60,000 acres were planted, 77% of which were lost to drought, the report said.
“The lower acreage years, like this year, are mostly due to drought,” Sekula said. “But this year we also have a lack of irrigation water in reserves as well as higher market prices for alternative crops that growers switched to, like corn and grain sorghum.”
In Willacy County, home to a majority of dryland cotton fields, plants never emerged in some fields, Sekula said. Even in water districts in other counties where some water still is available, irrigated fields are showing slow growth, she said.
“A lack of rain, lack of irrigation water and mild winter that failed to kill off insect populations all point toward heavy insect pressures that will simply move from winter vegetables and other crops,” said Raul Villanueva, extension entomologist.
Separately, a private market specialist said a lack of South Texas cotton could complicate merchantsΆ efforts to have enough cotton in reserve to meet export and domestic needs through mid-fall.
Elsewhere, isolated thunderstorm development is expected this afternoon in the West Texas Plains, but local weather forecasters see no rain falling in the Lubbock area.
Most of the activity is expected across the eastern Texas Panhandle and western Oklahoma. However, forecasters say thunderstorms may briefly extend into the extreme southeastern Panhandle and northern Rolling Plains before moving east during the evening hours.
While chances are highly conditional, any storms that do develop will have the potential to become marginally severe, forecasters say, with quarter-sized hail and wind gusts to 60 miles per hour.
A 20% chance for showers and thunderstorms is foreseen this afternoon at Amarillo. No other rain chances are in the forecasts for either Amarillo or Lubbock through Thursday.
Futures open interest fell 2,500 lots Thursday to 163,268, with MayΆs down 81 lots to 558, JulyΆs down 2,837 lots to 108,482 and DecemberΆs up 454 lots to 51,824.
Certificated stocks grew 1,054 bales to 508,326. There were 2,971 bales awaiting review for a possible total of 511,297.
World values as measured by the Cotlook A Index gained 20 points Friday morning to 90.80 cents. The index premium to ThursdayΆs July futures settlement narrowed eight points to 7.57 cents.