Growers on the Texas High Plains boosted plantings 7% from last year to 4.005 million acres, 62% of the stateΆs cotton acreage and 36% of the U.S. upland area. Weather still called critical for the Plains crop.
Cotton futures settled with a slight loss on a late jump in most-active December after it had hit a new intraday low for the move Tuesday.
December closed off 11 points to 73.40 cents, in the upper quarter of its 150-point range from down 131 points at 72.20 to up 19 points at 73.70 cents.
Maturing July plunged 213 points to close at 77.08 cents.
Volume dipped to an estimated 17,700 lots from 18,298 lots the previous session when spreads totaled 2,796 lots or 15% and EFS 50 lots. Options volume totaled 3,889 calls and 6,327 puts.
Upland plantings on the Texas High Plains were in line with some private estimates at 4.005 million acres, up 7% from last yearΆs 3.751 million but down 4% from 4.179 million acres in 2012. The region accounted for 62% of the Texas acreage and 36% of the U.S. upland area.
Recent rains have greatly improved the areaΆs crop prospects from last year when abandonment, mainly because of drought, totaled a whopping 2.077 million acres or 55% of the planted area.
Growers in the adjoining Rolling Plains planted cotton on 1.15 million acres, up from 1.055 million in 2013 but below 1.185 million in 2012. The total cotton area for the High and Rolling Plains combined rose to 5.155 million acres, compared with 4.805 million last year and 5.364 million two years ago.
“Given how critical weather will continue to be and how much of an impact the West Texas crop has not only on the Southwest region but the U.S. as a whole, there are no guarantees with potential production,” Sharon Johnson, senior cotton specialist with KCG Futures in Atlanta, observed in a report.
“The rain to date is wonderful — no one doubts that,” she said, but added that subsoil moisture readings indicate the crop will require additional timely summer rain.
Subsoil moisture, which tap-rooted cotton uses as a reserve during the summer growing season, was low going into the planting season because of prolonged drought. As of Sunday, subsoil moisture was short to very short in 60% of the northern High Plains and in 63% of the southern district, according to USDAΆs Texas field office.
Johnson, who reviewed the acreage report on an InterContinental Exchange webinar, said the World Agricultural Outlook Board can be expected to reduce abandonment in its July report from the June estimate, though possibly not by as much as some might think.
She also expects the WAOB to maintain a near-average yield at 823 pounds per acre for harvest. But because the National Agricultural Statistics Service will be running crop surveys for the August report, the WAOB may not be as aggressive as otherwise might be the case, she said.
Johnson outlined several production scenarios with various levels of abandonment and yields. Two of the lowest abandonment levels in her calculations with yields at or above average, which would assume near normal weather, would mean a potential U.S. crop ranging from around 16 million to 17 million bales is in play, she said.
Futures open interest increased 650 lots Monday to 144,738, with JulyΆs down 176 lots to 2,124 and DecemberΆs up 188 lots to 119,436. Cert stocks grew 3,331 bales to 458,863. There were 3,577 newly certified bales, 246 bales decertified and 20,632 bales awaiting review.
World prices as measured by the Cotlook A Index fell 115 points to 88.40 cents. The premium to MondayΆs July futures settlement widened 53 points to 9.19 cents.
Forward A Index values for 2014-15 dropped 95 points to 81.20 cents, narrowing the discount to the 2013-14 index by 20 points to 7.20 cents and widening the premium to MondayΆs December futures close by 39 points to 7.69 cents.
