In its September 10 report, the USDA said that cotton production is expected to be up two percent and analysts and producers are waiting to see if the report has a dampening effect on the eye-popping cotton prices of the last few weeks.
“The cotton futures market has been nothing short of remarkable over the last half of the 2010 growing season,” said Scott Stiles, Extension economist for the University of Arkansas Division of Agriculture.
“Since making a summer low of 72.96 cents on July 20, the December futures contract has gained almost 20 cents. The high this summer came Sept. 7 when the contract traded up to 92.82.”
Growers have rarely seen prices above 90 cents.
“Over the past 25 years, the December contract has only traded above 90 cents in three months: March 2008, September 1995 and October 1995,” Stiles said. “The December contract has never posted a monthly closing price above 90 cents in the last 25 years.”
Tight supplies helped set the pricing stage earlier this year and “this week, the December 2010 futures contract hit a 25-month high. One reason for this has been a handful of world weather events in key cotton production areas.”
Flooding in Pakistan, the world’s fourth-largest cotton producer, along with cool, wet weather in China has prompted lower production estimates from Asia.
These world weather events only add to the concerns over potential yield loss from the persistent heat and drought in the Southeastern United States for most of the 2010 growing season. Heavy rain from Tropical Storm Hermine also caused problems along the lower Gulf Coast of Texas where cotton is ready to harvest.
“Weather will remain a prominent issue for the cotton market until the United States -- and the entire northern hemisphere -- crop is harvested,” he said. “This is a year in which every bale counts.”
According to the USDA crop production report, all cottonproduction is forecast at 18.8 million 480-pound bales, up two percent from last month, and up 55 percent from last year’s 12.2 million bales. Yield is expected to average 839 pounds per harvested acre, up 62 pounds from last year. Upland cotton production is forecast at 18.3 million 480-pound bales, 56 percent above 2009. Yields in the Delta region are expected to decrease from last month.
The report said producers in Texas are expecting increased yields, but the estimate was completed before Tropical Storm Hermine came ashore.
For more information on cotton production visit www.aragriculture.org/cotton.htm .