What is in this article?:
- Cotton prices move up, but rally subsides
- Positive factor
- Cotton prices have moved above the target 75-cent mark, closing Friday at 75.21. Although moving sideways during July, prices have slowly trended up since the low back in early June. After several rallies, successive lows have been higher and higher. This typically signals a slow shift toward a more bullish outlook.
Cotton import demand from China is a positive factor in the short-term and should help support prices. Longer-term, prices could be negatively impacted by the build-up and subsequent release of stocks into the pipeline.
USDA’s August numbers estimate the U.S. crop at 17.65 million bales — compared to 15.57 last year. I believe there is now growing belief that the U.S. crop will get smaller as we get into the September, October, and further report estimates. The Texas crop, in particular, is expected to be smaller than the August estimate.
The overall Crop Condition Index continues to decline although it is weighed heavily by the Texas situation. Over the past month, the Index has declined from 3.34 (mostly Fair to Good) on July 22 to 3.10 (Fair) on Aug. 19.
Rain, rain, and more rain
The Southeast and portions of the Mid-South have had rain over the past 30 days. Many portions of the Southeast have had 5 to 10 inches of rain.
The incidence of disease is increasing and spreading in all crops. Spray operations have slowed and rain has reduced the effectiveness of sprays.
Isaac is expected to bring high winds and more rain. This will cause further delay and damage from disease unless fungicides are already applied and effective, depending on the growth stage and existing condition of the crop.
The cotton crop (as of Aug. 19) was approximately 25 to 35 percent open in portions of the Mid-South.
In the Southeast, mostly 10 to 15 percent or less of the crop is open. Of course, those numbers are likely higher now.
In areas where the crop is not too open, lint damage and loss from Isaac would be less, but the main threat will be cotton blown over due to high winds. Depending on the track of the storm, the amount of rain, and severity of the winds as it moves further inland, it looks like both the Mid- South and Southeast crops could be affected.