By Don Shurley
Will cotton reach 70 cents? There are factors in play that could take us there. But the situation is volatile and yet unknown. Cotton production in 2015 will require patience and a clear understanding of the risks and careful evaluation of marketing tools and choices.
Cotton growers are asking the question, “Are we going to reach 70 cents?” No one knows the answer but there are several factors that will determine which way we go. With the possible tightening of the trading range, a “breakout” seems ever more likely—either the uptrend in lows fails to hold or the price ceiling is finally broken.
1. Acreage. US growers said back in March they intended to planted acreage 9.55 million acres. USDA will release the first estimate of actual acreage at the end of June. There has been and continues to be reports of acreage being switched to other crops such as grain sorghum, corn, and soybeans. In major peanut states, there has also always been uncertainty about the peanuts vs. cotton (and other crops) battle for acreage due to the attractiveness of new farm bill PLC coverage on peanuts. At least one report suggests that actual acreage could be ¼ million acres less than USDA’s 9.55 million number in March.
2. Weather. Weather has also become a factor. After successive years of drought conditions, Texas currently has had too much rain. For the month of May, the High Plains area has been mostly 200 to 400% percent of normal rainfall. The Coastal Bend area has been mostly 200 to 400% of normal. In the High Plains, excessive rainfall and cool temperatures have delayed planting.
On the other hand, May has been a dry month in the Southeast where cotton-growing areas have been mostly 25 to 75% below normal. Rainfall in the Mid-South has been mixed with some areas below normal and some above normal.
For the week ending May 24th, cotton was 47% planted compared to 61% normal at that date and 35% for the previous week. While some states made substantial progress during the week ending May 24th, overall, planting is now 14 percentage points behind normal compared to 11 points behind normal as of May 17th. Seven of fifteen states are now ahead of average or only slightly behind average in planting. Several states made substantial progress during the week, especially in the Southeast. Tennessee also made progress—picking up 20 percentage points.
Texas remains a concern. Texas made only a little progress last week and as of May 24th, is only 29% planted compared to 50% normal. Missouri made progress last week but is still 12 points behind normal. North Carolina picked up 26 points in progress last week but is still 14 percentage points behind normal.
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