Once again showing itself to be a weather market, cotton prices retreated below 80 cents early in the week reacting to the forecast showing West Texas was in line to receive significant rainfall. Upon realizing showers were not substantial enough to relieve the extreme dry conditions, prices rebounded closing today (5/17) at 81.45, but not before hitting a high of 81.80.
One can expect similar market action over the next few weeks as weather, the on-call sales squeeze, and strong demand continue to exert their influence.
Our silver bullet, demand, shows no sign of weakening as reflected in this week’s export sales. Combined old and new crop sales totaled 382,600 bales. Combined weekly sales have been at this level, or higher, for almost three months. Beyond that, shipments totaled 422,700 bales for the week, off 2 percent from its 4-week average.
Keep in mind we only need to average 130,000 bales a week from now until the end of July to meet the USDA export estimate.
West Texas: How Much Rain Would It Take To Matter?
I hate to sound redundant, but until we have a better handle on the West Texas crop, the downside risk to this market is minimal. Presently, what we’re hearing sounds very bleak for the dryland crop. An interesting comment was made by an agronomist from that region just last week. He pointed out that to get decent yields now it would take rainfall accumulations to the extent where growers couldn’t get in the field to plant.
Another case in point, we heard where a grower north of Lubbock received an inch and a half of rain one afternoon last week and a few hours after he found the soil to be bone dry two and half inches below the surface. This simply illustrates how deficient subsoil moisture is in the region and why the Texas dryland crop, if stands are obtained, will require spoon feeding season long.
More on Cotton
Meanwhile, Back At The Mall
Being a half full glass kind of guy, I must close with something more positive. We’ve talked about strengthening demand for some time now. Well, I saw a commercial the other night on TV that brings this to light. Women age 25 to 40 have been the demographic least likely to purchase cotton apparel. Times may be a changing! Victoria Secret is now running a national TV ad promoting their all-cotton line of lingerie. It is being touted as “sexy and stretchy!”
After doing some research, it was found that 6,436 women’s briefs can be made from one bale of cotton. Of course, size might matter. That being said, it’s going to take the purchase of a lot of women’s bras and briefs to significantly increase cotton consumption, but, my friends, it’s a step in the right direction. I don’t know if we have any women readers, but if so, ladies hurry on down to your nearest Victoria Secret store.
Finally, gentlemen, what better excuse for you to pay the store a visit on behalf of your spouse than for the sake of your business.