“The market is saying not to wait for higher prices,” said Dr. John Robinson, AgriLife Extension cotton economist. “I would say that if somebody has a fairly decent contract, I would be looking to sell on any rally.”
Most Texas cotton has been harvested, and much is sitting in warehouses waiting to be sold, Robinson said.
“Growers I have been talking to are not seeing many inquiries from buyers for their product,” he said. “As a matter of fact, that doesn’t surprise me as the market is shrinking down, and buyers want to wait and see how low it’s going to go.”
A number of things contributed to this situation, Robinson said. World supply uncertainties, which had been driving prices up, were pretty much resolved during December. And though the U.S. Department of Agriculture “whittled away” at its estimate of Texas yields and production, markets continued to be depressed from sluggish global economic growth.
Much of U.S. cotton is exported to Europe, which is having a recession of its own. Sluggish economic growth both here and abroad mean weak demand for consumer goods, which in turn reduces demand for raw cotton, he said.
“Also, high prices have led mills to switch to more man-made fibers,” Robinson said.
Robinson noted there was a rally in future prices on Jan. 3, but that was in the context of a higher stock and commodity markets across the board.
“Basically, it was what we call a risk-on day, with the money going back into the riskier assets. So that’s helping to boost from the outside market standpoint, and that’s boosting ag commodity futures and cotton in particular.”
There may be more rallies in the coming months, but Robinson questioned if they would be high enough to be worth paying to store cotton while waiting.
“I see a slightly weaker picture for next year than for now. If you’ve got cotton now, I sure wouldn’t hold it a long period of time,” he said.
Robinson writes a monthly cotton marketing newsletter and provides daily news and commentary on cotton on AgriLife Extension’s Master Marketer Facebook page at http://www.facebook.com/AgriLifeMasterMarketer .
More information on the current Texas drought and wildfire alerts can be found on the AgriLife Extension Agricultural Drought Task Force website at http://agrilife.tamu.edu/drought/ .
AgriLife Extension district reporters compiled the following summaries:Central: December rainfall helped small grains. Stocker cattle were grazing on winter wheat and oats, which allowed some livestock producers to extend grazing. Hay supplies continued to be short.
Coastal Bend: Some areas received 2-5 inches of rain over the last two weeks, giving hope to agricultural producers and improving winter-pasture conditions. Other areas received only a trace. However, many ponds remained dry, and soil moisture was still well below levels needed for spring planting. Livestock producers continued supplemental feeding of cattle and purchasing hay from outside the area. The pecan harvest was nearly over. Quality was good, considering the year’s growing conditions.
East: December rains significantly improved conditions across the region. The rains raised water levels in lakes, ponds and creeks. Winter pastures that were planted early showed good growth. In some cases, producers were already able to graze cattle on winter pastures. However, many producers continued to purchase and feed hay. Calving season began.
Far West: A snow before Christmas brought from 0.5 inch to as much as 3 inches of moisture. Cold daytime temperatures and below freezing temperatures at night finally gave way to a few warmer days with highs from the mid to upper 60s. Producers lost cattle in some areas due to poor forage quality and excessive mesquite bean consumption. Most pecan orchards were harvested. Pecan yields were low but quality was fair. Winter wheat and oats under irrigation were mostly in poor to fair condition with a few plots in good condition. Rangeland remained in poor condition. Cattle were in poor to fair condition with producers providing alfalfa cubes, molasses and syrup tubs. Some producers continued to sell cattle. Early calving herds were expected to begin calving soon. Producers finished shipping earlier backgrounded calves.
North: After December rains, soil moisture levels were short to adequate. Small grains and winter pastures were doing well. Most stock ponds received some runoff water. Cattle were in fair to good condition. Producers were still looking for hay. Feral hogs continued to be a major problem.
Panhandle: Rain and snow fell over most the region. Soil-moisture levels varied from adequate to very short, with most counties reporting short to very short. The cotton harvest was nearly complete. Winter wheat was in excellent to very poor condition, with most areas reporting poor to very poor. Dryland wheat was just beginning to emerge with the recent moisture. Rangeland and pastures varied from fair to very poor condition with most reporting very poor. Livestock producers continued supplemental feeding of cattle.
Rolling Plains: Some areas received moisture in December and saw improvement in rangeland and pastures as a result. Weather was mild with daytime highs from 50 to 60 degrees, and nighttime lows in the 30s. Small grains showed significant growth. Winter wheat was in good condition, and producers were able to turn cattle on to it for grazing before the end of December. The condition of livestock began to improve. Hay supplies remained short, and producers hoped to bale winter wheat not being grazed. Some counties lifted their burn bans.
South: Scattered light rain throughout the region slightly improved soil-moisture levels. In the west part of the region, soil-moisture levels were from very short to adequate. All other parts of the region had short to very short soil-moisture levels. McMullen and Webb counties reported 2.75 to 3.5 inches of rain, but stock-tank water levels remained low in those areas, as well as in most of the region. Livestock producers continued to provide supplemental feed as forage supplies remained low, and rangeland and pastures were in poor condition. In Frio County, the planting of wheat and oats wound down and most of the crop had emerged. Producers in the Zavala County area had a difficult time harvesting both fresh and regular spinach fields due to wet conditions. In Hidalgo County, corn was maturing, and growers continued to pre-irrigate cabbage, lettuce, tomato and onion fields. Also in that county, citrus, sugarcane and some vegetable harvesting was ongoing. In Starr County, onions were progressing well.
South Plains: Some rain and snow fell the weekend after Christmas in most counties. Amounts varied greatly. Temperatures were at seasonal averages for the most part with some above-average days. Cotton ginning was completed. Burn bans were lifted in most counties, but drought continued to impact the area. Winter wheat still suffered from drought conditions despite the winter moisture. There was some growth of cool-season grasses in rangeland and pastures, but livestock producers in most counties continued to provide supplemental feed. Little or no fieldwork was being carried out in most counties.
Southeast: Recent rains and warm days promoted cool-season grass growth in some areas. Producers who planted earlier were already seeing some growth. Some ponds were beginning to fill. Brazoria County reported a total of 20 inches of rain for 2011, which was only about 37 percent of the average of 54 inches annually.
Southwest: Recent rains promoted growth of winter pastures and small grains. Soil-moisture levels slightly improved, but the moisture remained very low in the deep soil profile. Winter pastures were growing because of the recent rains and warmer temperatures, but they were still short. Grazing conditions improved, however, and growers were sowing spring wheat.
West Central: Winter arrived with cool days, cold nights and heavy freeze warnings. Many counties reported receiving rain during the Christmas break, but all needed more. Most burn bans were temporarily lifted. Winter wheat and oats showed some improvement where there was rain, but most fields remained in poor condition. Rangeland and pastures were also in poor condition, though the rain did improve some winter grasses and forbs enough to provide grazing. Producers continued to provide supplemental protein and hay to livestock. Hay was in very short supply and hard to find. The pecan harvest was mostly complete, with yields much lower than in previous years. Many producers were preparing to heavily trim their orchards.