2012-02-08 / Farm & Ranch

A Service Provided by Plains Cotton Cooperative Association February 2, 2012

Cotton futures on the Intercontinental Exchange (ICE) had a mixed performance this week while the general direction of the market remained sideways, according to traders. Thursday, cotton futures found good support as buying lifted nearby contracts to their highest settlement in three days.

“ Although cotton prices closed in the plus column, it was a result that almost didn’t happen,” a trader said. “The market started out the day with a pretty dismal export sales report from USDA.”

The department reported an export sales reduction of 164,000 bales, as sales to Bangladesh, Turkey, and India were more than offset by cancellations from China, Vietnam, and South Korea. Net sales of 17,800 bales for delivery in 2012-13 were reported for China and Mexico. The bright spot in the report was the export shipment figure. At a marketing year high of 366,000 bales, exports were up 83 percent from the previous week and 97 percent from the four-week average.

Sales on the spot cotton market also were considerably lower as Texas, Oklahoma, Kansas, and New Mexico producers sold 11,278 bales online in the week ended Feb. 2 compared to 43,816 bales the previous week. Average prices received ranged from 77 to 83 cents per pound.

Bringing the 2011 season to a close, very little cotton remained to be ginned in Kansas where weather related issues earlier in the season caused delays in harvesting. Field preparations for spring planting of the 2012 crop were nearing completion in South Texas and the Coastal Bend, and beneficial rainfall was reported in many areas of both regions this week. Rain also was received in Central Texas over the past week helping to alleviate drought conditions but delaying fieldwork. Scattered thunderstorms were reported on the Texas High Plains as well, but much more rainfall is needed to ease the severe drought conditions there.

Ironically, fears of another year of drought conditions may result in fewer irrigated and more dryland cotton acres on the Texas High Plains this year, according to a Texas AgriLife Extension Service expert. Typically, Texas High Plains cotton acres are almost evenly split between dryland and irrigated.

“Last year, we had 4.6 million acres total, with about 55 percent being dryland cotton,” said an extension cotton specialist in Lubbock, Texas. “Usually, our cotton acreage would be split with about a 52/48 percent mix of dryland and irrigated. Looking ahead, there’s a chance that we’ll see a little more dryland than irrigated cotton planted this year.” With the area remaining dry, fears of continued drought are the biggest issue facing producers and will be at the heart of any additional shifts in planting, he said.

“ Cotton farmers will go ahead and plant, but if we don’t get some help from Mother Nature, a lot of the irrigated producers here have indicated they will just wait and see how things look before committing in 2012,” he explained.

Cotton observers in the High Plains area say the “wait-and-see” game could play until July 15 which is the latest date producers can certify a crop as dryland for crop insurance purposes. The situation certainly gives analysts something to monitor for many months ahead.

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