Cotton prices rally as Texas growing conditions turn mixed
By Karn Dhingra
Texas AgriLife
After two years of low prices, cotton prices rallied — though Texas growers’ fortunes still depend heavily on where they farm, said a Texas A&M AgriLife Exten- sion Service expert.
John Robinson, Ph.D., an AgriLife Extension economist- cotton and professor in the Texas A&M De- partment of Agricul- tural Economics, said conditions form “a definitely mixed bag” depending on location.
He said conditions for cotton across the state match a Drought Monitor map that shows distinct lines between dry, mod- erate-drought and drought-free areas.
Growing conditions split by region
Texas’ cotton acreage is concentrated in the northwest regions of the state in the AgriLife Extension districts of the Pan- handle, South Plains, Rolling Plains and West Central, with the rest spread across the Interstate-35 corridor, Gulf Coast and Rio Grande Valley, Robin- son said.
The Rolling Plains, West Central Texas, the I-35 corridor, the Gulf Coast and the Rio Grande Valley have seen increased rain and cotton fields have steadily improved, Robinson said. Cotton in South Texas is nearing harvest, and producers now need dry weather to avoid delays.
The upper Panhan- dle has stayed hot and dry most of the season and has likely lost significant dryland acreage, while the South Plains, home to most of the state’s cotton, has seen only patchy rain along with extreme heat.
“It just sort of depends on where you are,” Robinson said.
A June 30 U.S. De- partment of Agricul- ture report projected Texas cotton acreage at 5.4 million acres, slightly above last year, Robinson said. He said cotton often performs better than corn or sorghum un- der drier conditions.
Prices rally on fund short covering
Prices broke out of an unusually flat, low range in May, jumping from about 65 cents per pound to above 80 cents per pound and briefly touching 88 cents per pound before settling into the upper 70 to lower 80 cents per pound range, where they sit now. In a report for South- ern Ag Today, Rob- inson said much of the rally came down to large investment funds buying back cot- ton contracts they’d bet against for two years. Those funds had been betting pric- es would keep falling — a bet known as a “short” position — but as prices held firm, they started buying back into the market to close out those bets, which pushed prices even higher.
Government data from the Commod- ity Futures Trading Commission, CFTC, confirms the shift: in April, these funds flipped from betting against cotton to bet- ting on prices to rise, right around the same time prices jumped roughly 20 cents per pound. Robinson said growing concern about supply, driven by the dry start to the season, added even more fuel to the rally.
Disrupted fertilizer exports due to con- flicts in the Middle East have also raised input costs, though this year’s prices leave growers better off than the previous two seasons, Robinson said.
Outlook favors some seasonal softening
Robinson expects some seasonal price softening as harvest approaches, based on a 20-year average pat- tern that sees prices typically ease from mid-July into harvest as uncertainty leaves the market and har- vest data confirms actual supply. Harvest begins in South Texas soon and will move north through fall. Barring a major shift in supply and demand, he expects that pat- tern to hold.
An El Niño pattern has driven this year’s wetter-than-normal conditions over much of the state and should strengthen further into fall and winter, Robinson said.
Cotton fields in the Rolling Plains and High Plains could still use rain, but produc- ers along the Gulf Coast need hot, dry weather to finish har- vest. How much cot- ton Texas ultimately harvests will depend on how that wet pat- tern unfolds, Robinson added.
AgriLife Extension district reporters compiled the following summaries:
PANHANDLE Rainfall was spotty across the district, with some areas receiving isolated showers while oth- ers remained dry through the week. Topsoil and subsoil moisture ranged from very short to ad- equate. Daytime highs reached the mid-90s, and heat unit accumu- lation for cotton con- tinued at a maximum pace. Many cotton fields reached the first flower stage, signal- ing an increased plant water demand criti- cal for boll develop- ment. Corn was silk- ing and tasseling on earlier-planted fields, and a few sorghum fields were starting to produce heads. Dry- land grain sorghum struggled to survive in the driest areas and extended dry soil conditions combined with elevated after- noon temperatures exacerbated disease pressure. Bacterial late season decline and interveinal chlo- rosis were noted in random fields. Pas- ture and rangeland were in very poor to good condition.
SOUTH PLAINS Rainfall was highly variable across the district, with some areas receiving up to 3 inches and others none. One area re- ported totals of 3.75- 11 inches that gave cotton and sorghum fields a significant boost. Rains also filled stock tanks in parts of the district. Cooler temperatures earlier in the week offered temporary relief, but forecasts called for a return of triple-digit heat. Sub- soil moisture reserves continued to decline in areas that missed the heavier showers, and irrigation was ex- pected to run nonstop through the coming heatwave. Early plant- ed corn was in the dent stage while later corn was tasseling, and cotton was bloom- ing or approaching first bloom. Several thousand acres of cotton were reported lost to hail and poor germination. Potato harvest was roughly 40% complete, and cucumber planting had about two weeks remaining. Livestock conditions were fair to good, and pasture and rangeland ranged from very poor to good.
ROLLING PLAINS Rainfall was scat- tered, with some counties receiving several inches while others recorded only trace amounts. Top- soil moisture ranged from very short to surplus. A break from extreme heat helped pasture and cotton conditions in the areas that caught moisture. Native pastures greened up with new growth and stock tanks filled. Drier portions of the district continued to suffer, with haygrazer burning up and pas- tures turning brown. Wheat harvest was complete, with yields averaging 48-70 bush- els depending on loca- tion, and better yields were reported where more rain fell earlier in the season. Sor- ghum was colored and nearly ready for har- vest pending a drop in grain moisture. Cattle looked exceptional in the wetter portions of the district thanks to good pasture and wheat grazing, and producers expected two more Bermuda grass cuttings. Hay was largely made, though prices were among the lowest in a long time. Overall, pasture and range- land were in very poor to good condition.
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