Agfax Buzz:
    April 6, 2012

    Cleveland on Cotton: Demand Appears to Be Moving Upward, Slowly

    AgFax.Com - Your Online Ag News Source

    By O.A. Cleveland, Professor Emeritus, Mississippi State University

    Cotton prices moved lower all week as the market failed to find any support in the USDA March Cotton Planting Intentions Report. The report indicated U.S. growers would plant 13.2 million acres in 2012. While this was in line with the National Cotton Council’s February report (conditions as of Jan 1-15) and the February USDA subjective estimate of 13.0 million (February conditions), most felt the report would reflect smaller plantings. However, while USDA released the report on March 30, it was based on conditions as of March 1. It was just after that date that the market succumbed to the bears and traced lower most of March. The March bearish news was related to questionable demand as the world grew weary of Chinese and European economic growth rates.

    My inclination remains one of expecting December futures to return for a challenge of the dollar mark. Rather, I will continue sawing on the limb that keeps me suspended in thin air and almost alone in suggesting that cotton demand has turned the corner and is now headed back up, albeit slow. I would be remiss not to suggest that most of my colleagues feel the market is on a path that will take it to the mid-to-high 70’s. Their rationale is that demand continues to slip and that world stocks, at the highest level ever, will prove to be too much for the 85 cent mark to hold to hold.



    Yet, to steal a line from Coach Lou, “not so fast my friend.”  Virtually every economic indicator for the U.S. economy is pointing upward…job growth without higher wages (meaning zero inflation), the stock market’s record levels, retail sales, tax revenues, housing sales, decline in unemployment. All of these and other speak to an improving economy. Granted, the growth is slow, but as stressed as the respective 50 states are, most are seeing actual state revenues now exceed projections. Too, India, after halting all cotton exports because of its now massive and growing domestic textile industry, announced it will join China in building a national strategic reserve of cotton. The U.S. is now just about the lone exporter of cotton. Too, U.S. growths are low priced, all but insuring that U.S. exports will continue to grow.

    This is not to say that the market is out of the woods. However, growers in both the Southeast and Midsouth are switching acreage almost daily from cotton to soybeans. Look for actual U.S. acreage to be some 12.8-12.9 million acres. Much of the acreage switch is coming on irrigated land, (even some in West Texas for feed), thus it is high yielding acreage that is coming out of cotton.

    The heavy hand of excess supplies is not as great as appears, especially with West Texas well into its second year of a major drought. Look for the USDA April supply demand report on April 10 to drop ending stocks some 300,000 to 600,000 bales. The AgMarket Network team will present its analysis of the report on April 11, 7:30 AM central time. The group discussion can be heard live on radio station KFLP 900 AM Floydada, Texas and KZIP 1310 AM Amarillo, Texas. You can listen live over the internet at www.AgMarketNetwork.com. A recording will be available at noon at www.AgMarketNetwork.com.

    Tags: , ,

    Leave a Reply

    Name and Email Address are required fields. Your email will not be published or shared with third parties.

    Agfax Cotton News

    Texas (Hale And Swisher): Pigweed, Fleahoppers In Cotton, Mites In Corn7-11

    Rose on Cotton: Market Slide for 9 Weeks; WASDE Feeds Bears7-11

    Georgia Cotton: Armyworms Causing Problems7-11

    Mississippi: Moth Traps Same as Last Week7-11

    Cleveland on Cotton: Bloodletting is Over – Export Sales Increase7-11

    Doane Cotton Close: Negative Reaction to USDA Reports7-11

    Texas Cotton: Fall Armyworm Counts Climbing7-11

    AFB Cotton Close: Prices Continue Lower7-11

    Texas Cotton: No Magic Product to Rescue a Struggling Crop7-11

    DTN Cotton Close: Falls to Contract Low, Halves Loss7-11

    Louisiana: Climate App Helps Measure Local Rainfall7-11

    Georgia Cotton: Rainfastness of PGRs7-11

    Texas: Ag Update Meeting, Haskel, July 227-11

    WASDE Cotton: Higher U.S. Production, Ending Stocks Forecast7-11

    Texas Cotton: Fleahoppers, Aphids, Worms Move In7-11

    Mississippi: Soybean, Cotton Acres Above March Estimates7-11

    DTN Cotton Open: Ticks Down to New Contract Low7-11

    Georgia Cotton: Irrigation Timing – Best Tool?7-11

    Keith Good: Big Corn Crop Could Drive Down Farm Incomes, Land Values7-11

    AgFax Cotton Review: Potential Export Increase; First Bale of the Season7-10

    Doane Cotton Close: Trade Estimates Increased Stocks in WASDE7-10

    South Carolina Soybeans, Cotton: Kudzu Bugs, Aphids, and Stink Bugs, Oh My7-10

    Lack of Succession Planning Can Be Costly in More Ways Than One – DTN7-10

    AFB Cotton Close: Futures Hit 2-Year Low7-10

    ELS Cotton Competitive Payment Rate Is Zero7-10

    DTN Cotton Close: 8th Straight Session of Losses7-10

    Arkansas Soybeans: Farmers Face Race Against Clock if Replanting7-10

    DTN Cotton Open: Trades in Red After Touching New Low7-10

    U.S. Energy: Iraqi Oil Production Forecast Reduced Due to Unrest7-10

    Gasoline Prices: Make 3-Cent Drop7-10

    Propane Stocks: Increase by 3.8M Barrels7-10

    Diesel Prices: Average Declines by a Penny7-10

    North Carolina: Brown Marmorated Stink Bug Can Wreak Havoc7-10

    Tennessee Cotton: Foliar Fertilization Following Early Season Stress7-10

    Keith Good: $1.2B Paid Out in 3 Months for Livestock Disaster Relief7-10

    Doane Cotton Close: 70 Cents Marks Important Support7-9

    AFB Cotton Close: Continues Lower with Outside Weakness7-9

    Cotton In Midsouth – Plant Bugs Build, Odd Armyworm Situation – AgFax7-9

    12 Arkansas Counties and 1 from Arizona Make Natural Disaster List7-9

    DTN Cotton Close: Slides to Another Contract Low7-9