Texas Rains Mean Happy Growers, Slipping Market

It was and still is all about weather.

After a four year hiatus, West Texans can again declare, “It always rains by Memorial Day.” The million dollar rain came.

Cotton prices were on the defensive all week as prices moved lower by the day. Leading the price momentum shift lower was the potential rain forecast for the Southwest plains. Intraday forecasts during the week offered increased rainfall estimates, bringing about lower prices. Speculative fund managers, tuned to the forecasts and reading their technical charts, began taking profits and exited the market in mass. The only defense offered came from mill price fixations against on-call sales and actual mill buying.

However, speculative fund profit taking was just too extensive once Mother Nature’s nectar began to bless the western New Mexico and Texas plains. Cotton prices moved lower – some ten cents below the 96 cent highs recently observed. Too, excellent moisture conditions were forecast over the entire Southwestern cotton belt through the weekend – the multi-million dollar variety.

While this does not signal the end of the 100-year drought, it was the first step. Yet, the total absence of subsoil moisture will deem it necessary that a continuation of timely rains throughout the growing season will be necessary if the crop is to live up to its potential.

So, where does the market go from here?

First, the lower prices uncovered excellent demand. Unfixed mill call sales continue to be supportive to the market, but were reduced in the downturn. The price hemorrhaging should now be mostly contained, but prices could slip another three to four cents lower before all the damage is down.

The possibility for July to retrace back above 88 to 89 cents is now the first target. Mill demand has resurfaced as the dwindling level of quality is in great demand and with prices six cents below those of ten days ago – especially now that mill margins are very positive at current levels.

Earlier comments had suggested that a good rain would take at least three cents out of new crop, and that was the reaction of the New York December futures contract – down from 82-83 cents to the 79 cent level. One cannot overemphasize the importance of continued timely rains in Texas.

Yes, there is dancing is the streets now, but without moisture a month from now the dancing shoes will be covered with dust and wilting cotton. What happens tomorrow is more important than today. Nevertheless, we will continue the rain celebration for now.

The price damage has been done. Expectations are for stable to higher prices.

Topics: ,

Leave a Reply

Market Analysis Stories
Market Analysis

Cleveland: Feeling Bearish and Blue

February 1, 2016

Loss of cotton demand and a looming move of Chinese stocks has even O.A. Cleveland saying, “This hurts.”

Market Analysis

Shurley on Cotton: Prices Still Low, but Find Stability

January 25, 2016

After recently threatening the 60-61 cent range, prices now seem to have found a little support and – dare we say – upward momentum.

Market Analysis

Shurley on Cotton: Looking Back at 2015 and Ahead to 2016

January 13, 2016

The New Year has not started off well for cotton. It is concerning, but this recent decline is likely short-term.

OA Cleveland
Market Analysis

Cleveland: Stagnant Prices and Demand Are Frustrating

January 8, 2016

The cotton market continues to take it on the chin, as prices go nowhere and demand for cotton remains low.

don shurley
Market Analysis

Shurley on Cotton: Ending the Year with a Positive Outlook

December 22, 2015

In spite of the challenges in 2015, it’s good to remember that the marketing year is less than half over. There may yet be better opportunities down the road.

OA Cleveland
Market Analysis

Cleveland: Low Demand Maintains Status Quo

December 21, 2015

Despite what should be positive indicators for cotton, the lingering loss of market share has simply stripped demand from the market for now.

Market Analysis

Shurley on Cotton: Hitting a Wall at 65 Cents

December 14, 2015

The disappointing decline is likely due to some of the bullish energy running out after the nice uptick we’ve experienced recently, plus a not so encouraging export report and the December USDA production and supply/demand numbers.

Around The Gin
Product News

New FieldView Drive Provides Real Time Field Data Transfer

January 26, 2016

The Climate Corporation is launching FieldView Drive, a device that provides seamless transfer of real time field data and mapping from planting or harvesting equipment to a mobile device.

Product News

PhytoGen Releasing First Enlist Cotton Variety for 2016

January 13, 2016

PhytoGen is releasing PHY 490 W3FE, the first cottonseed variety with the Enlist cotton trait, for the 2016 growing season.

Product News

Enlist Cotton Ready to Launch for 2016

January 6, 2016

Dow AgroSciences announced that cotton growers will have access to the Enlist cotton technology in 2016.

Product News

Bayer Announces New 2016 FiberMax and Stoneville Cotton Varieties

January 5, 2016

Bayer has announced the release of three new FiberMax and Stoneville varieties for 2016, all featuring the company’s GlyTol, LibertyLink and TwinLink technologies.

Product News

Deltapine Announces Class of 16 Varieties

December 14, 2015

Four new Bollgard II XtendFlex cotton varieties make up the recently announced Deltapine Class of 16.

Product News

PhytoGen Varieties Raise Standards for Yield and Quality

November 30, 2015

Growers propelled two PhytoGen brand varieties toward the top of the 2015 USDA Cotton Varieties Planted report.

Product News

2016 Seed Showcase – All-Tex and Dyna-Gro

November 16, 2015

Sister cottonseed companies are working to extend their footprint in 2016.

Product News

2016 Seed Showcase – CROPLAN

November 16, 2015

Up-and-coming CROPLAN relies on careful variety evaluation and placement strategies for growth.

Latest News
Market Analysis

Cleveland: Feeling Bearish and Blue

February 1, 2016

Loss of cotton demand and a looming move of Chinese stocks has even O.A. Cleveland saying, “This hurts.”

Market Analysis

Shurley on Cotton: Prices Still Low, but Find Stability

January 25, 2016

After recently threatening the 60-61 cent range, prices now seem to have found a little support and – dare we say – upward momentum.

Market Analysis

Cleveland: “Stuck in the Mud” Market Remains Tiresome

January 22, 2016

This market is stuck in the mud – looking more like just holding a bottom rather than turning around.

Market Analysis

Cleveland: Market Yawns as It Closely Watches China

January 18, 2016

Despite a 2.0 million bale reduction in world production and consumption, the market yawned and moved lower, all while watching for signs of a potential dump of low grade stocks by China.

Market Analysis

Shurley on Cotton: Looking Back at 2015 and Ahead to 2016

January 13, 2016

The New Year has not started off well for cotton. It is concerning, but this recent decline is likely short-term.

Market Analysis

Cleveland: Stagnant Prices and Demand Are Frustrating

January 8, 2016

The cotton market continues to take it on the chin, as prices go nowhere and demand for cotton remains low.

Market Analysis

Shurley on Cotton: Ending the Year with a Positive Outlook

December 22, 2015

In spite of the challenges in 2015, it’s good to remember that the marketing year is less than half over. There may yet be better opportunities down the road.

Market Analysis

Cleveland: Low Demand Maintains Status Quo

December 21, 2015

Despite what should be positive indicators for cotton, the lingering loss of market share has simply stripped demand from the market for now.

Market Analysis

Shurley on Cotton: Hitting a Wall at 65 Cents

December 14, 2015

The disappointing decline is likely due to some of the bullish energy running out after the nice uptick we’ve experienced recently, plus a not so encouraging export report and the December USDA production and supply/demand numbers.

Market Analysis

Cleveland: Market Rises, Then Slips, Following USDA Report

December 14, 2015

The market slipped a bit last week. But it’s set to crawl higher – backing and filling along the way, but with a positive upward bias.

Market Analysis

Market Showing Bullish Indicators

December 4, 2015

The cotton market is demonstrating signs of life again. The U.S crop will be lower, and improved U.S. exports will hone sharp points on the old bull’s horns.

Market Analysis

Shurley on Cotton: Prices Finding More Support and Momentum

November 30, 2015

Prices are finding increasing support around the 62-cent level. That may not be exciting, but firming up the floor in a very volatile and uncertain market is a good thing.

Market Analysis

Shurley on Cotton: Prices Need Something to Grab Hold Of

November 16, 2015

Cotton prices desperately need something to grab hold of to help build momentum.

Market Analysis

World Production and Carryover Drops, But No Change in Prices

November 13, 2015

The absence of almost anything resembling demand continues to keep cotton prices locked in a near 10-cent trading range.

Market Analysis

Shurley on Cotton: Looking Once Again for 4-Wheel Drive

November 2, 2015

U.S. fiber quality has been at a premium, especially for the last two crop seasons. This is expected to continue, but it is uncertain for how long and for what price.