What is in this article?:
- Despite wild swings in estimates, cotton market remains steady
- Alabama estimate lowered
• Just in the yield calculations alone, there were changes in 16 of 17 states.
• The market’s failure to move back toward carrying charges has got everybody really antsy because of the lack of deliverable supplies.
Despite wild swings in USDA’s Sept. 12 estimate of U.S. cotton yield, when all was said and done, overall U.S. cotton production and the cotton market remain steady to higher.
“Just in the yield calculations alone, there were yield changes in 16 of 17 states,” said Mike Stevens, cotton analyst and commodity trading advisor, speaking at the Ag Market Network’s September conference call. “Six were up and 10 were down. But it didn’t change the bottom line.”
Stevens said recent trading sessions in the cotton market “have ignored the traditional influences like the value of the U.S. dollar, the lack of export demand and even technical signals. December is clearly overbought, but it really doesn’t seem to matter. We have now moved the trading range up to $1.09 to $1.15. The next target will be $1.17 to $1.22. I would not bet against that.
“Traders continue to trade the long side due to the competitive strength in the December-March spread. The market’s failure to move back toward carrying charges has got everybody really antsy because of the lack of deliverable supplies.”
Stevens added that mills “have woken up to the fact that they can paint themselves into a corner with unfixed positions just like last year. Until something proves different, it looks like this market is going to stay firm.”
John Robinson, Extension economist, Texas A&M University, said the changes in yield across states was surprising. “I was expecting a reduction in the Texas number, but they only whittled it down from 636 pounds to 631 pounds. I would have expected it to come down more than that. Maybe that’s still true, but it will take another month or two for that to happen.”
There were significant changes in some cotton states. For example, Louisiana cotton yield increased from 800 pounds per acre in August to 926 pounds in September, a 25 percent increase. Yield declined by 154 pounds in Virginia, however.
O.A. Cleveland, professor emeritus, Mississippi State University, believes the Louisiana cotton crop had probably been underestimated in previous months. This, plus improvements in the crop since then, resulted in the significant increase in estimated yield.
Cleveland also noted that Arkansas, Missouri and west Tennessee “have the most outstanding crop there is, period. Missouri’s yield of 1,092 pounds is just unheard of for the state. West Tennessee producers are very pleased with their crop.”