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

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.

Market Analysis

Demand for Quality Cotton Keeps Market Positive

October 11, 2014

The market spent most of the week in positive territory, as its ability to close higher continues to voice the immediate need for quality cotton.

Market Analysis

Shurley on Cotton: Fragile Market Shows Improvement, Outlook Still Cautious

October 11, 2014

After recently falling to the 61-cent level, prices have made a modest, but still welcomed, recovery.

Market Analysis

Chinese Government Now a Marketplace Fundamental

October 6, 2014

The more things change, the more they stay the same. But through their recent actions, the primary fundamental in the marketplace has now become the Chinese government.

International

Plexus: Market Still Has More Questions than Answers

October 3, 2014

Recent news from China has left the market cautiously bearish, mindful of the fact that there is still a lot of harvest time weather to negotiate.

International

ICAC – Lower World Cotton Prices to Persist in 2014/15

October 3, 2014

Noting the predicted 1.8 million tons of surplus cotton production and changes in China's cotton policy, a recent report from International Cotton Advisory Committee says prices are unlikely to rise to the levels of the last two seasons.

Around The Gin

Product News

Platform Specialty Products to Acquire Arysta LifeScience as Component for New Company

October 21, 2014

Platform Specialty Products has reached a definitive agreement to acquire Arysta LifeScience for approximately $3.51 billion.

Product News

PhytoGen Partners with Farmers to Aid Local Charities

October 17, 2014

Since becoming a partner in the Swisher Sweets/Sunbelt Expo Southeastern Farmer of the Year program three years ago, PhytoGen has made donations to 25 charities on behalf of state farmers of the year.

Product News

Enlist Duo Herbicide Approved; Enlist Weed Control System Now Cleared for Use

October 16, 2014

The Enlist Weed Control System from Dow AgroSciences has been approved for field use in corn and soybeans in 2015 by federal regulatory authorities, with introduction in cotton still scheduled for 2016.

News

Registration for 2015 Beltwide Cotton Conferences Opens as Program Takes Shape

October 3, 2014

Registration now is open for the 2015 Beltwide Cotton Conferences, set for January 5-7 at the Marriott Rivercenter in San Antonio, TX.

Product News

October 10 Deadline for Public Comments on Roundup Ready Xtend Crop System Plants

September 25, 2014

The public comment period on the draft environmental impact statement for cotton and soybean plants for Monsanto’s Roundup Ready Xtend Crop System will remain open through October 10.

Cotton Production

New Cotton Webcasts Focus on Using Yield Monitor Data for Precision Planning

September 10, 2014

Two new webcasts to help growers successfully capture and use data from yield monitors have been added to the Focus on Cotton online webcast resource, developed by Cotton Incorporated and the Plant Management Network.

Marketing

First Class Selected for Cotton Research and Promotion Program Hall of Fame

September 8, 2014

Five honorees have been elected to the first class of Cotton Incorporated’s newly-established Cotton Research and Promotion Program Hall of Fame.

Crop Inputs

FMC to Acquire Cheminova

September 8, 2014

Auriga Industries has agreed to sell its wholly-owned subsidiary Cheminova to FMC Corporation.

Latest News

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.

Market Analysis

Sleepy Market Hiding Potential Volatility

October 20, 2014

Cotton trading remains locked in a rather wide ten cent trading channel, but actively trading only a four cent band around 63 cents – 61 to 65 cents, that is. In other words, maybe we are being lulled to sleep.

Market Analysis

Plexus: Market on Firm Footing Through Harvest

October 17, 2014

December prices should remain on firm footing until the bulk of the U.S. crop has been harvested and the quality is known. But the massive global inventory probably means a sideways-to-lower market going forward.

Market Analysis

Demand for Quality Cotton Keeps Market Positive

October 11, 2014

The market spent most of the week in positive territory, as its ability to close higher continues to voice the immediate need for quality cotton.

Market Analysis

Shurley on Cotton: Fragile Market Shows Improvement, Outlook Still Cautious

October 11, 2014

After recently falling to the 61-cent level, prices have made a modest, but still welcomed, recovery.

Market Analysis

Chinese Government Now a Marketplace Fundamental

October 6, 2014

The more things change, the more they stay the same. But through their recent actions, the primary fundamental in the marketplace has now become the Chinese government.

International

Plexus: Market Still Has More Questions than Answers

October 3, 2014

Recent news from China has left the market cautiously bearish, mindful of the fact that there is still a lot of harvest time weather to negotiate.

International

ICAC – Lower World Cotton Prices to Persist in 2014/15

October 3, 2014

Noting the predicted 1.8 million tons of surplus cotton production and changes in China's cotton policy, a recent report from International Cotton Advisory Committee says prices are unlikely to rise to the levels of the last two seasons.

Market Analysis

Confusion Reigns in Market Following China Cotton Policy Announcements

September 29, 2014

Weighed down by unexpected announcements from China, cotton prices continued to trend lower and confusion reigned, as traders attempted to decipher the actual Chinese cotton policy.

Market Analysis

Shurley on Cotton: Time for Growers to Consider Their Marketing Options

September 26, 2014

This is not a good time to be trying to sell cotton. Nothing will appear relatively attractive at this point, but growers nevertheless need to carefully consider their options.

Market Analysis

Segment Swap Program Educates Cotton Board Producers About Importer Decisions

September 22, 2014

The Cotton Board's producer members recently participated in a “Segment Swap” program designed to give them a better understand of how cotton importers make their sourcing decisions.

International

China Announces Cuts to Cotton Import Quotas

September 22, 2014

In a move that could add more pressure to global cotton prices, China has announced that it will cut 2015 cotton import quotas to the minimum 894,000 tons required under its commitments to the World Trade Organization.

Market Analysis

Little Market Movement As China’s Plans Begin to Emerge

September 19, 2014

The current trading range continues, as the market analyzes the impact of flooding in the U.S., continued dryness in Australia and the first initial official announcement by the Chinese government with respect to its new cotton policy.

Market Analysis

Plexus: Market Continues to Meander Sideways

September 19, 2014

The cotton market has been shrouded in plenty of uncertainty lately, which continues to drive its meandering sideways movement.