Recent Price Movement
After testing the 60 cent level, cotton prices have enjoyed a little strength in the most recent trading and were able to climb back above the 62 mark.
In recent months, the 62 cent level had served as support, so the recent shift higher may signal a move back into their previous trading range.
As usually seems to be the case, there a couple of possible reasons for the increase.
One could be effects from outside markets, with many stock and commodity prices rising over the past week.
Another could be the heavy rainfall experienced throughout the Southeast growing region and possible concerns related to the harvest.
Rain, Rain, Go Away
Even though hurricane Joaquin remained offshore, it has been a very wet couple of weeks throughout the Southeast.
In North Carolina, records for the number of days of consecutive rainfall were tied or exceeded. In South Carolina, 15-20 inches fell on the eastern part of the state.
In those states, nearly 90% of planted acres have bolls open. Rain can stain fiber, and there may be impacts on the quality of the cotton coming from those states.
Some bolls may have also been knocked to the ground, but from a national production perspective, there likely will not be a major effect on the harvest number.
Due to declines in acreage in recent years, there is not as much cotton in the Carolinas and Virginia as there used to be.
Altogether, North Carolina, South Carolina, and Virginia represent only about 10% of national planted acreage.
Georgia alone, which was mostly spared from the heaviest downpours, is home to twice as much acreage as is located in those three states.
With Georgia spared, we may not see a large decrease in the national crop number.
USDA Numbers Coming
The next batch of estimates is released by the USDA on Friday.
Since the damage from the recent rains is so recent, any rain related effects likely will not be fully digested until November’s release and only minor changes are expected for U.S. figures.
Internationally, further decreases in mill-use estimates could occur.
This is because a series of macroeconomic estimating agencies lowered their forecasts for economic growth in both 2015 and 2016.