John Robinson, Extension economist, cotton marketing 

USDA’s July WASDE report reflected minor adjustments to the old crop (2023/24) balance sheet. U.S. cotton exports were lowered again, to reflect the continuing sub-par pace of export shipments. The 200,000 fewer exported bales implied 200,000 additional bales of ending stocks, which is a modestly bearish adjustment, judging strictly by the numbers. However, the lower export number wasn’t unexpected, and the delayed shipments will hopefully happen during the new crop (2024/25).     

As a reminder to readers, the new marketing year for cotton begins Aug. 1. The new crop balance sheet adjustments in the July WASDE report were on the supply side of U.S. cotton. USDA revised cotton planted acreage higher to reflect the additional million acres in their June Acreage report. However, they partially offset the effect of more planted acreage by assuming a lower percentage of harvested acres.  That is, they raised abandonment from 14% to 17%.  latter assumption jibes with the decline in crop condition ratings in Texas over the last month, plus the potential impact of thirsty crops in other regions of the Cotton Belt.  

So, with 9.67 forecast harvested acres at an average 844-pound yield per harvested acre, that implies a 17-million-bale crop, up from 16 million in the June WASDE. It is not a coincidence that USDA publishes these early forecasts in nice round numbers. At this stage, they are still working with historical averages and assumptions.   

Beginning in August, the USDA crop forecast will incorporate data from grower surveys about actual yields. This data stream will then be replaced with surveys of ginnings and counts of bales classed.  And the planted acreage picture is sometimes adjusted by FSA certified acres data. So, the picture still has plenty of room to change.  

ICE cotton futures appear to have taken an early plunge to their normal harvest-time seasonal lows.  The possibility of unexpected cuts on the production side still leaves room for a later season price rally. This is particularly true while hedge fund speculators are currently net short over 40,000 cotton futures contracts. These folks are betting on lower prices. If the crop size gets unexpectedly smaller, the short speculators might have to buy themselves out of their position in a short covering rally. Such an outcome could yield some brief fireworks to make up for the summer doldrums. 

For additional thoughts on these and other cotton marketing topics, please visit my weekly on-line newsletter at http://agrilife.org/cottonmarketing/.