2007-11-21 / Farm & Ranch

November 15, 2007

A Service Provided by Plains Cotton Cooperative Association

Cotton futures on the New York Board of Trade finished Thursday at their lowest level in more than a month on speculative fund sales and long position liquidations. Analysts said gains were limited in the market this week due to weak demand and larger production numbers in last week's supply and demand report. The industry is closely watching crop developments in Texas.

According to the latest crop production estimate released by USDA's National Agricultural Statistics Service, for the second time in the last three years Texas will produce a crop in excess of eight million bales. At 8.1 million bales, the November 2007 Crop Production report pegs the Lone Star State's cotton harvest as the second largest on record.

A majority of the Texas production increase is projected to come from the High Plains. There, cotton producers now are expected to harvest 5.3 million bales of the state's 8.1 million bale projection. Gins there now are working at full capacity and above average yields and quality are being reported.

"The best way to describe the 2007 High Plains cotton crop is to paraphrase one of the oldest sayings there is in agriculture 'Big crops get bigger," said a West Texas market observer. "So far, the 2007 Texas cotton crop, which has grown in each of the last three USDA Crop Production reports, is doing its best to guarantee that a new generation of agriculture producers and analysts believe in the validity of that saying," he added. The harvest season is drawing to a close in South Texas. Farmers have been cutting and shredding stalks in preparation for the winter. Ginning also is drawing to a close, with only a few gins in the Upper Coastal Bend still processing cotton.

Elsewhere in the country, lower-than-average yields continue to be reported from droughtstricken fields in Alabama and Georgia, with production ranging from 250 to 500 pounds per acre in most Alabama fields. Producers also have been disappointed with the quality of their crops attributing the shorter than average staple length to a lack of water during the growing season. Final picking activities have been completed in the Memphis Territory. Many small gins have finished processing for the season, while larger plants still have backlogs of cotton to press. Ginning, therefore, will continue for several more weeks. A vast majority of fields already have been prepared for winter, and an extended period of cold, wet weather would be welcome to help improve water table supplies and to kill overwintering insects.

In other news, net export sales of 146,200 bales in the week ended Nov. 8 were down 41 percent from the previous week and 27 percent from the four-week average. Major buyers were Mexico, Turkey, China, and Pakistan. Sales of 9,700 bales for delivery in 2008-09 were for Mexico and South Korea.

Export shipments of 177,100 bales were two percent more than the prior week, but eight percent below the four-week average. Primary destinations were Turkey, Mexico, China, and Indonesia.

Sales were lower in the spot cotton market as online trading by producers in Texas, Oklahoma, and Kansas totaled 14,117 bales in the week ended Nov.15 compared to 49,080 bales the previous week. Average prices received by producers ranged from 57.41 to 60.41 cents per pound versus 60.13 to 61.31 cents per pound one week earlier.

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