September 11, 2008
Cotton futures prices on the New York Board of Trade remained mostly under pressure this week due to poor demand. There also were reports of significant damage to the Louisiana cotton crop while considerable rain in parts of West Texas caused concern about crop development.
Regional analysts in the South Delta reported substantial damage to the Louisiana crop as a result of flooding rains from Hurricane Gustav. Defoliation of fields in the region remained limited. Cases of boll rot and hardlock also were reported in the state as well as in parts of Arkansas and Mississippi, and re-growth has occurred on some stands. Therefore, farmers will have to apply several rounds of harvest aid chemicals to kill the new vegetative growth, a process that will increase the cost of production.
High Plains farmers prayed for rain earlier this year, but the flooding storms that drenched Lubbock and the surrounding area this week were not what they had in mind. Cotton farmers now require heat to push their crop to its full potential, and the recent cool front chased away the dry, baking sun growers desperately need.
Elsewhere in Texas, farmers from central and northern parts of the state to the coast were carefully monitoring the approach of Hurricane Ike which was making its way to the Texas coast this week. According to the National Hurricane Center, the storm was projected to make landfall along the central Texas coast in the early morning on Sept. 13 as a category 3 or possibly category 4 hurricane.
Although picking is virtually complete in the Texas Upper Coastal Bend and Coastal Bend districts, work has just begun in the Winter Garden area. Farmers there are concerned that heavy wind and rains could adversely affect quality and yield.
In other news, USDA’s September supply/demand report contained numbers that were well within the range most cotton market analysts expected. The U.S. crop was pegged at 13.8 million bales, up one percent from August but 28 percent less than last year. Forecasters made their estimates before Sept. 1 so any damages to the nation's cotton crop from Hurricane Gustav or Hurricane Ike will not be tallied until the October report. In its report, USDA left domestic consumption unchanged from last month, but U.S. exports were reduced 500,000 bales to 14.5 million due to weaker world demand.
Meanwhile, the department’s latest weekly export report showed net sales of 138,300 bales, up considerably from the previous week but 36 percent less than the four-week average. Turkey and Mexico were featured buyers. Export shipments for the week ended Sept. 4 totaled 233,700 bales, up three percent from the previous week but down five percent from the four-week average. China was the primary destination.
Spot cotton sales were at a stand-still in the week ended September 11 as no bales were traded online by producers in Texas, Oklahoma, and Kansas compared to 843 bales the previous week.
“In addition to a lack of demand, producers are reluctant to sell at the current prices,” an analyst explained. “Unfortunately, the repayment amount on an old-crop loan would require a higher selling price than farmers could receive for their cotton this week.”