Recent Price Movement
Cotton prices have been easing lower over past week and December futures have recently been testing the low end of a range between 62 and 64 cents/lb.
Sluggish demand is a factor weighing on prices, while adverse weather conditions and the possibility of tightening U.S. stocks have been supportive.
Wet Weather Hanging Around
The weather this week has brought another round of precipitation to the cotton belt.
The Mid-South has been suffering from drought, so the recent rains may be beneficial over the long term, but storms are not welcome when bolls are open, and bolls are open about everywhere right now.
Unfortunately, it has also been raining about everywhere cotton is planted.
The Southeast has been trying to dry out, but it expected to get hit with another wave of storms later this week.
West Texas has also gotten rain recently, but the weather looks to be clearing, which should producers some chance to get out into the fields later this week.
Crop Condition & Progress
With the series of storms that have passed through in recent weeks, there is concern about the size of the U.S. crop.
At the moment, the exact effects are unknown.
The large changes to condition figures in South Carolina highlight the uncertainty.
In last week’s condition report, more than half the crop in the state was rated poor or very poor.
In this week’s report, that proportion dropped to only about 35%, which is a pretty big change.
This swing simply underlines how perceptions can change and that we cannot fully know the quality of quantity of the crop until it passes through the back end of a gin.
Supply and Demand Potentially Lower
However recent rains are digested by in future USDA forecasts can be expected to have some influence on price direction.
Another factor that we will have to pay attention to are global mill-use figures.
For the past several months, the USDA has been reducing their global consumption estimate.
A smaller U.S. crop will only be able to help out prices if there are buyers out there.
With demand moving in the wrong direction, the prospect of tighter carryout doesn’t have the impact in would in a healthier market.