Shurley on Cotton: August Numbers Likely Neutral to Bearish

By Dr. Don Shurley

The 2014 US cotton crop has been revised upward by one million bales from the July estimate. The August USDA crop production and supply/demand numbers released August 12 are the first estimates of the season based on an actual producer survey.

The July estimate was 16.5 million bales – based on estimated acreage abandonment of 15 percent and yield of 816 lbs/acre. These first produced-based numbers show abandonment of only 10 percent and a yield of 820 lbs/acre. The crop is forecast at 17.5 million bales – one million bales higher than the July estimate.

Abandonment is estimated at only 16 percent for Texas, and yield forecast at 632 lbs/acre. Yields appear strong just about everywhere. Much of the Mid-South looks to be over two bales per acre, and the Southeast also looks good, with yields approaching 900 lbs/acre or more.

The one million bale increase in the U.S. crop is offset somewhat by a half million bale increase in expected U.S. crop exports for 2014/15. This likely reflects the increase in production and available supply and perhaps the impact of the lower tier of prices we are experiencing. U.S. ending stocks are still expected to rise three million bales from last season.

Looking at the World and foreign numbers, production overall is changed very little other than in the U.S. The China crop estimate is unchanged, the Australia and Brazil crops are lowered, and the India crop is increased. World cotton use is increased 1.3 million bales from the July estimate. World ending stocks are revised downward by 600,000 bales.

The August numbers are best described as a mixed bag. Increase in the U.S. crop is bearish, but this may have been anticipated and already largely factored in to the current level of prices. Certainly, however, there is fear this could push prices even lower. But, the increase in U.S. exports is good news, and the increase in World Use is good news. Ending stocks did not increase, and that is good news.

At this point (with prices having lost 12 cents since mid-June), we take anything positive we can find. But in reality, aside from a major supply shock somewhere, prices likely have a rough road ahead. The U.S. crop looks promising, but the World and foreign situation is less known. Longer-term (into winter and spring 2015), the outlook will depend on the eventual U.S. and World supply and trends in demand (U.S. exports).

 

Shurley is Professor Emeritus of Cotton Economics, Department of Agricultural and Applied Economics, University of Georgia

Topics: ,

Leave a Reply

Market Analysis Stories

Market Analysis

Current Market Level Holding Its Ground

December 19, 2014

The market’s ability to hold its current level has overshadowed the fact that cash prices around the world have firmed a bit, signaling a stronger basis position for most growths.

Market Analysis

Cotton Market is Ripe for a Rally

December 5, 2014

Current price consolidation activity has helped uncover excellent demand. A short covering rally could possibly be triggered sooner than later.

Market Analysis

Plexus: Market Showing Signs of Life

December 5, 2014

After closing the previous 14 sessions in a very tight price band, March cotton started to break out to the upside, boosted by a firmer cash market and possible spec buying.

Market Analysis

Shurley on Cotton: New Round of Weakness Sets In

November 25, 2014

Merchants are now pricing cotton basis the March 2015 futures contract. But March futures – and all prices – are showing a new round of weakness.

Market Analysis

I Mean It This Time. The Bottom Is In.

November 24, 2014

I said it at 61/62 cents, so I’d best say it for 57 cents. The bottom is in.

Market Analysis

Plexus: Spec Movement Reveals Downside of Sideways Market

November 17, 2014

The recent trading action that pushed cotton prices into the 50s is linked to the interplay of spec short covering and spec long liquidation, which should keep the market in its current sideways trend.

Market Analysis

Shurley on Cotton: November Numbers Mostly Neutral, Prices Hold

November 11, 2014

USDA’s November crop production and supply/demand numbers are little changed from the October numbers.

Around The Gin

Product News

Deltapine Announces Class of 15 Cotton Varieties

December 16, 2014

Deltapine has announced two new high-yielding cotton varieties for its Class of 15, with several potential varieties awaiting regulatory approvals of the Bollgard II XtendFlex technologies.

Precision Technology

NORAC Hybrid Mode Receives U.S. and European Patent Approval

December 8, 2014

NORAC Systems International Inc.’s Hybrid Mode in-crop spraying feature has received patent approval in the U.S. and Europe.

Product News

Americot Adds Another High Yielder for 2015

November 24, 2014

Americot rode to success on the performance of two top varieties in 2014. For 2015, the company is adding another workhorse variety to the stable.

Product News

CROPLAN a Brand to Watch for 2015

November 21, 2014

Growers familiar with CROPLAN corn and soybean varieties in the South may want to keep an eye on the company’s cotton program, too.

Product News

Deltapine Focused on Raising the Yield Bar in 2015

November 17, 2014

No brand of cotton seed was planted on more acres in 2014 than Deltapine. So it stands to reason that the company’s variety researchers are preparing to introduce monumental changes to their seed lineup in 2015.

Product News

Growth Continues for Dyna-Gro and All-Tex

November 13, 2014

Crop Production Services has put a two brand approach in place for its Dyna-Gro and All-Tex brands of cotton. And their varieties are getting stronger each year.

Product News

PhytoGen Gaining Foothold in West Texas Market

November 12, 2014

In a year that saw PhytoGen introduce several new varieties to the Cotton Belt, an old standard once again stole the headlines as the company looks to gain more of the Southwest market.

Product News

Monsanto, Sumitomo and Valent Extend Crop Protection Partnership

November 10, 2014

Monsanto, Sumitomo Chemical and Valent U.S.A. have agreed to extend their strategic partnership in Monsanto’s Roundup Ready PLUS Crop Management Solutions platform for U.S. cotton and soybeans.

Latest News

Market Analysis

Current Market Level Holding Its Ground

December 19, 2014

The market’s ability to hold its current level has overshadowed the fact that cash prices around the world have firmed a bit, signaling a stronger basis position for most growths.

Market Analysis

Plexus: Slight Upward Bias in a Sideways Market

December 19, 2014

The market appears to be holding in a sideways to slightly higher range between 59 and 63 cents. But don’t rule out spikes to higher levels on spec short covering.

Market Analysis

Market Bumps Up on News of Smaller U.S. Crop Numbers

December 15, 2014

USDA’s lower projections for U.S. cotton production should strengthen the current global demand shift in favor of U.S. cotton. The implication is a relative higher price.

Market Analysis

Cotton Market is Ripe for a Rally

December 5, 2014

Current price consolidation activity has helped uncover excellent demand. A short covering rally could possibly be triggered sooner than later.

Market Analysis

Plexus: Market Showing Signs of Life

December 5, 2014

After closing the previous 14 sessions in a very tight price band, March cotton started to break out to the upside, boosted by a firmer cash market and possible spec buying.

Market Analysis

Shurley on Cotton: New Round of Weakness Sets In

November 25, 2014

Merchants are now pricing cotton basis the March 2015 futures contract. But March futures – and all prices – are showing a new round of weakness.

Market Analysis

I Mean It This Time. The Bottom Is In.

November 24, 2014

I said it at 61/62 cents, so I’d best say it for 57 cents. The bottom is in.

Market Analysis

Plexus: Spec Movement Reveals Downside of Sideways Market

November 17, 2014

The recent trading action that pushed cotton prices into the 50s is linked to the interplay of spec short covering and spec long liquidation, which should keep the market in its current sideways trend.

Market Analysis

Shurley on Cotton: November Numbers Mostly Neutral, Prices Hold

November 11, 2014

USDA’s November crop production and supply/demand numbers are little changed from the October numbers.

Market Analysis

Prices Still on the Path to Nowhere

November 7, 2014

Cotton prices continued their path to nowhere and are expected to continue the same back and forth trading action, reinforcing the thought that the market has bottomed out.

Market Analysis

Prices Hint That the Market Bottom Is In

November 3, 2014

Goblins may continue to haunt the cotton market past the Halloween holidays. But the market is giving more signals that the bottom is in.

Market Analysis

With WTO Brazil Settled, Cotton Casts a Wary Eye on Chinese Policy

October 31, 2014

With the conclusion of the WTO Brazil case, the U.S. cotton industry can bring a renewed focus to the challenges ahead, coming from a familiar source.

Market Analysis

Shurley on Cotton: Lackluster Week Closes on a High Note

October 27, 2014

An end of week uptick closed the market up 81 points from the previous week. But the longer-term direction is still sideways, with a range of mostly 62 to 67 cents.

Market Analysis

Same Song, Same Tune – Market Sings the Low-to-Mid 60s Blues

October 24, 2014

The same record that has been spinning for weeks is still playing. The 61 to 62 cent price resistance holds firm, attempts to close above 65 cents continue to be thwarted, and the potential for a short covering rally lingers strong in the background.

Market Analysis

Plexus: Market “Boxed In” Between Support and Resistance

October 24, 2014

Volatility dropped this week, as the market is discounting a scenario in which prices are not expected to change significantly over the coming months. Once all harvest is complete and sorted out, we may see renewed pressure on cash prices.