2009-06-10 / Farm & Ranch

Cotton Market Weekly

June 4, 2009
A Service Provided by Plains Cotton Cooperative Association

The U.S. dollar seemed to be the driving force behind the cotton market this week as weakness in the currency and signs of economic recovery renewed investor interest in commodities. Tuesday, the dollar fell to an eight-month low which boosted the December cotton futures contract to close up 80 points at 62.52 cents per pound.

The following day, however, the dollar rebounded, and the bottom fell out from under cotton futures with prices moving almost limit down during the final halfhour of trading. The December contract closed at 59.93, down 259 points, but almost half of the loss was regained on Thursday as the dollar resumed a weaker tone.

"Cotton traders are trading currencies and money flow much more than the bare fundamentals of cotton," an analyst said at midweek. "As long as the dollar goes one way, the cotton market will find it easy to go up."

Although it appeared to have no influence on the market this week, traders were keeping an eye on U.S. weather conditions and their impact, or potential impact, on the 2009-10 cotton crop. The latest crop progress report showed 77 percent of U.S. cot- ton acreage had been planted as of May 31, up from 61 percent on May 24 but down two percentage points from a year ago. The pace of planting in Texas was almost in line with the national average at 74 percent and slightly ahead of last year.

The most serious problems were in the Delta. Mississippi plantings stood at 76 percent versus the five-year average of 97 percent, and Arkansas was at 82 percent compared to the five-year average of 99 percent. Persistent rain there has hindered planting, and field activity was at a standstill on Thursday due to light to moderate rain showers. Daytime temperatures have been running 10 to 15 degrees below normal for this time of year, and most of the crop that has been planted is two to three weeks behind schedule. Thus, warm and dry weather is needed to spur crop development and improve plant health.

Mostly sunny and warmer conditions were the rule in West Texas by late week. Planting continues in the region's southern dryland fields as farmers worked to get seed in the ground ahead of crop insurance deadlines. Despite isolated thunderstorms, soil moisture levels on the southern High and Rolling Plains ranged from abnormally dry to extreme drought, according to USDA's Drought Monitor map for the week ended June 2. Thus, moisture is urgently needed to ensure proper seed germination.

Meanwhile, the latest export sales report was much stronger than anticipated by the cotton trade. USDA reported net sales of 145,900 bales in the week ended May 28, up 42 percent from the previous week and 43 percent better than the four-week average. Featured buyers were Vietnam, China, Bangladesh, Taiwan, and Thailand. Net sales of 20,500 bales for delivery in 2009-10 were mainly for Turkey, South Korea and India.

Export shipments for the week totaled 332,000 bales, up 20 percent from the previous week but down 3 percent from the fourweek average. Primary destinations included China, Pakistan, Turkey and Indonesia.

In the spot cotton market, producers in Texas, Oklahoma and Kansas sold 407 bales online in the week ended June 4, more than doubling the previous week's volume of 198 bales. Average prices received by producers ranged from 44.98 to 52.00 cents per pound compared to 49.35 to 50.00 cents per pound the previous week.

Return to top

Click here for digital edition
2009-06-10 digital edition