Recent Price Movement
Cotton prices continue to drift sideways.
After trending lower throughout most of July, values for the December futures contract have dropped to below the 65 cent mark.
As could be guessed from the sideways trading pattern, there has been limited activity in the physical market.
Some of the sluggishness in purchasing interest could be a reflection of market expectations that prices may move lower once the northern hemisphere harvest begins.
Of course, as that harvest progresses, we will get a better idea of how big it is going to be, and that will influence price direction.
International Progress & Condition
Internationally, a point of concern relative to the weather has been India.
This has been determined to be an El Nino year. With El Nino, the monsoon that brings more than 80% of annual rainfall to most of India can be light.
This year, the monsoon got off to a good start, which eased concerns.
In recent weeks, the rainfall has been sporadic and led to some renewed concern about yields.
Most recently, the rains have returned and with cotton being relatively drought tolerant, worries have once again been allayed.
Domestic Progress & Condition
Weather has been favorable across the majority of the cotton belt with hot conditions reported in many regions.
West Texas remains free of drought and the crop is generally reported to be in good condition.
In the Mid-South, some rain may be helpful to help alleviate heat-related stress. Outside of certain areas in Missouri and Tennessee, the crop in the region also looks to be in good condition.
In the Southeast, weed issues have been reported in Georgia and some heat stress has been reported in the Carolinas.
Nationally, the crop is about even with the average pace of development and condition statistics are some of the strongest we have seen in over five years.
The crop number in next month’s USDA report will be interesting since it will be the first estimate generated from observations of field conditions.