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Shurley On Cotton: A New Floor For Planted Acres

By Beck Barnes

The long-awaited and much anticipated first estimates of actual crop acres planted for 2015 are out.  Pre-report estimates by observers and analysts for cotton ranged mostly from 9.1 to 9.5 million acres with some lower and some higher. The new USDA estimate is 8.998 million acres; lower than even the lowest of most pre-report estimates. If realized, this would be the lowest US cotton plantings since 1983.

Due to rains, delays in planting, and possible acreage shifts to other crops, USDA has announced it will resurvey cotton in Texas, grain sorghum in Kansas, and soybeans in Arkansas, Missouri, and Kansas. If new data collected justifies changing the current estimates, the revised numbers will be released on August 12.

USDA obviously wants to make sure the acreage number is as accurate as possible. This is good, but unfortunately this will add even more uncertainty to an already very uncertain US and global market situation for cotton. Texas currently comes in at 5.2 million acres planted—half of a million acres less than the “intentions” number back in March and 16 percent less than last year. Given wet weather and planting delays, this number for Texas doesn’t seem much out of line to me. No need to speculate; we’ll just have to wait and see.

The cotton numbers from March appear to have held in the Southeast despite a very attractive peanut program and shifts in acreage to peanuts from cotton, corn, and soybeans. Acreage is down 18% from last year but held at the March level. Other areas were down some compared to the March intentions.

So what now?  We finally have our acreage number albeit subject to a bit of tweaking. The number is lower than even the lowest of most pre-report pundits. Is this going to finally get the bulls going?  Maybe. But, acres planted don’t make a crop. Acres harvested and yields make the crop. With currently very favorable moisture conditions across much of the Cotton Belt and should conditions continue favorable, this crop could yield high enough to offset some of this acreage decline.

Prices are also still subject to what happens in China and India—how will a so-called “weak” monsoon season impact India’s production and regardless of what China says, what will the facts eventually say about their production, the quality of stocks, the sales from government reserves, and the demand for imports.

It is anticipated that USDA, in its July 10 reports, may show 2014 crop year US exports at over 11 million bales. Assuming no other adjustments, this would bring US carry-in stocks to the 2015 crop year at something less than 4 million bales.  This could give prices a little push but maybe not. I can’t imagine any serious observer of the cotton market who doesn’t already know that exports are running well ahead of USDA’s current estimate; thus, the market may already be adjusted for and anticipating this.

Prices are tempting to break out of their sideways pattern and had actually been attempting to do so even before today’s numbers—ending last week at over 67 cents. Producers are waiting on a move to 70 cents. I’ve preached that here as well.

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Agricultural Market Update: Grain Prices, Crop Conditions, and Weather Impacts

Welcome back to our channel where we provide comprehensive updates on the latest trends and changes in the agricultural sector. This week, we're looking at significant movements in grain prices, crop conditions, and the effects of weather patterns. Let's dive into the details:

Grain Price Decline Grain prices have fallen to their lowest levels since 2020, with December corn down 4.3% and November soybeans losing 3.1%. This decline is partly due to the beneficial moisture brought by Hurricane Beryl to the Midwest, which has improved crop conditions significantly. The USDA reported that corn and soybean crops are in their best condition in four years, contributing to the downward pressure on prices.

Record Short Positions and Market Sentiment Fund traders have increased their net short positions in the corn market to a record level, with a net short of 347,000 contracts of corn. This reflects a bearish sentiment in the market, further influencing grain price dynamics. Similar selling trends were observed in soybeans and SRW wheat, indicating broad market caution.

Weather Impact and Forecast Hurricane Beryl has brought significant rainfall across Arkansas, Missouri, western Tennessee, western Kentucky, and southern Illinois, with more expected over Missouri, Illinois, and Indiana in the coming days. Despite this, the market is currently more focused on the moisture benefits rather than potential heat risks forecasted in the 6-10 and 8-14 day periods.

US Crop Conditions Corn and soybean conditions have shown slight improvements last week, with corn rated 68% good to excellent and soybeans at 68%. These are among the best ratings for this time of year since 2020, suggesting robust crop health that could continue to influence grain prices.

Winter Wheat Harvest and Spring Wheat Conditions The US winter wheat harvest is progressing well, ahead of schedule with significant portions already harvested in Kansas and Texas. Spring wheat conditions are also favorable, with 75% rated good to excellent, although there have been some declines in states like Idaho, South Dakota, and Washington. Brazil's Corn Harvest and US Exports Brazil's second corn crop harvest is advancing rapidly due to favorable hot and dry conditions, with 63% of the crop already harvested. Meanwhile, US corn shipments saw a substantial increase last week, indicating strong export demand, which contrasts with the recent drop in domestic grain prices.

Ongoing Developments Lastly, the USDA reported a flash sale of corn, with significant quantities sold to unknown destinations, scheduled for delivery over the next two marketing years. This could signal ongoing international demand for US corn despite lower prices.

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