U.S. cotton in good shape at mid-season

Three out of the four U.S. cotton-growing regions could harvest near-record crops this fall. Growers will need every precious pound, however, with prices possibly slipping into the mid-30-cent level, say market analysts attending the second annual Cotton Market Roundtable, a live Web event July 13, at the New York Board of Trade.

Here's a wrap-up of the analysts' comments by region:

Mid-South, Southeast

“USDA tells us that we have about 3.8 million acres of cotton planted in the Southeast, compared to about 3.6 million acres last year,” said O. A. Cleveland, cotton marketing specialist and professor emeritus at Mississippi State University. “We have about 4.8 million acres in the Delta compared to about 3.9 million last year.

“Crop conditions are favorable at this time,” he said. “About 70 percent of the crop in the Southeast and the Mid-South is in good to excellent condition. Louisiana may have the best crop it's ever had, at 88 percent in good to excellent condition, and Mississippi is not far behind at 77 percent.”

The outstanding crop in the Southeast is in North Carolina, where a little over 1 million acres is reportedly planted. But there could be as much 50,000 more acres planted in the state, according to Cleveland. “The crop has had excellent moisture, some say too much early, but it's a very well-fruited crop.”

South Carolina's crop is a little above average, while the south Alabama crop “is as good as it's ever been at this time of the year.”

USDA pegs the combined Southeast and Mid-South crops at 11.6 million to 11.7 million bales, “but realistically, it's more like 11.5 million to 12 million bales.” That would be the largest crop, by over 1 million bales, over the 10.7-million bale 1996 crop.”


“The Southwest is quite a contrast to the Southeast and Mid-South,” said Carl Anderson, professor and Extension economist of cotton marketing at Texas A&M University.

“Thirty percent of the Texas crop is in poor or very poor condition. We have almost 300,000 acres planted in Oklahoma where conditions are perhaps even worse than in Texas with about 40 percent of the crop in very poor or poor condition.”

In Texas, dry weather prevented germination on some acreage in the High Plains, south of Lubbock, according to Anderson. “So we're going to lose perhaps 800,000 acres in the region. We also had huge hail and windstorms right through the middle of the southern High Plains which took out 350,000 to 400,000 acres. So right from the beginning, we've lost 20 to 25 percent of the Texas acreage.”

If weather doesn't improve soon in the southern part of Texas, around Weslaco and McAllen, some of the dryland crop may be zeroed out, too, the economist said.

A lone bright spot of sorts is the cotton crop in the Corpus Christi area. “Some is doing quite well, some is not. Our best cotton in the state is in the upper Coastal region just west of Houston. The Blacklands, which planted a little more acreage this year, is looking reasonably well.”

On the other hand, “the Rolling Plains has poor stands and lack of water. We're not expecting that crop to be any better than last year.

“That leaves us with a crop in Texas of 3.95 million bales. We think Oklahoma will make about 200,000 bales. So we're looking at, give or take a few hundred thousand bales, around 4.1 million to 4.2 million bales for the region.

Far West

“The Far West cotton crop is in pretty good shape,” said Jarral Neeper, an economist with Calcot, in Bakersfield, Calif. “A month ago, I wasn't willing to say that. Things looked a little shaky. We didn't get off to the best start, with alternating hot and cold weather. But in the last month, the crop has come on very, very strong in Arizona and California.”

Neeper says farmers in the Imperial Valley, along the river, “are looking at another potential record-breaking year. Central Arizona is in very good shape right now, probably not as good as last year, but growers are pleased.

The San Joaquin Valley may not beat the record yield of last year. “But I think we'll come close. We'll see an upland cotton production number in California of around 1.6 million bales, with Pima somewhere between 480,000 and 500,000 bales.

“So we're looking at roughly 2 million to 2.1 million bales of production in California and another 700,000 to 730,000 bales out of Arizona, for a total close to 3 million bales of upland and Pima.

“Another encouraging thing is that for the most part, growers have had to spend very little money on the crop,” Neeper said. “We've had very little insect pressure so far.”

All total, the analysts project a 2001 cotton production of between 18.6 million and 19.2 million bales, compared to USDA's July 11 forecast of 19.2 million bales. Bearish, right? It's hard to figure out, says Cleveland.

“The supply/demand report Wednesday morning (July 11) was about as bearish a report as I have ever seen. But the market response to that was to go up 100 points. So is the market telling us that the bottom is in or that the trade has pretty much spotted this report?”

Cleveland sees pressure for the market to slip back below 40 cents. “We seem to be getting a good bit of international interest every time the futures market falls below 40 cents. Maybe that's the stability level, but I'm not comfortable at all saying we don't go below 40 cents.”

There's not much upside potential either, noted Cleveland. “In the near term, until we can get more confirmation about the crop, maybe we can get up to 44 to 46 cents. USDA goes to the field two weeks from today with its objective yield surveys and if it comes back saying the same thing it's saying now, we've got a lot more pressure below 40 cents.”

Anderson and Neeper agree that prices could trend lower.

“This year, we've felt the bottom was in the 50s, then the middle 40s and now we're concerned that we might not be able to hold this 40-cent December, provided this crop comes off in other areas outside the Southwest,” Anderson said.

“In general, I think we're going to be in a very tight trading range over the next three to four months unless we get some weather event to take us to the upside,” Neeper said. “We'll probably trade 35 to 45 cents, in general, and bounce up on occasion, if merchants get interested in pulling cotton away from the growers.

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Cotton market roundtable breaks listening records

THE COTTON Market Roundtable, held July 13 at the New York Board of Trade, broke all previous records for Internet attendance at the commodity exchange, according to Tom Walker, with NYBOT.

NYBOT had blocked off 70 lines for the Webcast, which began at 7:30 a.m. Eastern time and lasted for about an hour and a half. By the time the broadcast began, the 70 lines were full.

However, anyone not able to log on could access a recording of the archived event at NYBOT's Web site, www.nybot.com. Walker said that shortly after the Roundtable ended, over 100 people had done so. Many more cotton producers listened to the broadcast via teleconferences at county Extension offices from California to the Carolinas.

O.A. Cleveland, an economist at Mississippi State University, Carl Anderson, an Extension economist with Texas A&M, Jarral Neeper, and economist at Calcot, Bakersfield, Calif., and Joe Nicosia of Allenberg Cotton Co., Memphis, provided analyses and outlooks for the cotton market. John Maguire, vice president, Washington operations, National Cotton Council provided the latest on farm bill legislation.

The broadcast is geared to the entire industry,” said Pat McClatchy, executive director of the Ag Market Network, an event sponsor. “It's farmers, merchants, millers. It's nice to have a meeting like this in the summer to stand out by itself. We have the acreage report at the end of June, the production report that comes out a couple of days prior (July 11). It's just the right time to do it.”

The event evidently carries some weight in the markets. In 2000, the first year that the Roundtable was broadcast, analyst comments sent the market rising. This year, news of a large crop and smaller-than-projected exports and domestic use quickly reached the pits on the trading floor at NYBOT and prices fell.

The event, broadcast from a boardroom at NYBOT, is an annual special mid-season cotton update, and is sponsored by NYBOT, Farm Press Publications and the Ag Market Network. The Ag Market Network also sponsors monthly teleconferences on grains and cotton. All of the events provide market outlooks and pricing strategies for growers.

To access an archive of the Cotton Market Roundtable, scroll down the NYBOT homepage and click on the roundtable banner.

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