Some observers believe a “philosophical change” may have occurred in the cotton market in response to USDA’s supply/demand report released May 10. The first U.S. projections for 2002-03 included sharply lower production, continued strong exports, higher domestic consumption, and lower ending stocks.
U.S. cotton production this coming season is projected at 17.8 million bales based on anticipated planted acres and the 10-year average of abandonment and yields. An expected growth in retail cotton consumption as economic conditions improve is reflected in the domestic mill use figure of 7.8 million bales, a 2.6 percent increase from the current season.
Stronger foreign demand and continued surplus domestic supplies will sustain a historically large U.S. share of world trade; therefore, exports are projected at 11.0 million bales, the same as the revised 2001-02 level. Consequently, ending stocks in 2002-03 are likely to drop 1.0 million bales to 6.7 million, about 36 percent of total use.
“USDA’s projections indicate the U.S. may conquer its oversupply situation in one year rather than two or three,” David Stanford, PCCA’s vice president of marketing, says. “It reinforces the old adage – the cure for low prices is low prices,” he adds.
USDA pegs world production and consumption for 2002-03 at 91.0 and 95.5 million bales, respectively. Thus, world stocks could drop almost 10 percent to 40.6 million bales. Production is projected to fall seven percent, as the current season’s historically low prices should significantly reduce planted acres.
The size of the U.S. crop always is of interest to cotton market observers, and as the majority of the nation’s cotton is planted, the market’s attention is consumed by weather concerns.
In late May, Oklahoma cotton producers reported better moisture conditions than they had seen in several years, but unseasonably cold weather had slowed crop progress. Although more acres were planted to cotton this season, a larger cotton crop in the state will depend heavily on warmer weather conditions and timely rain.
Most growers in South Texas still are battling drought conditions. The number of acres planted to cotton in the Texas Lower Rio Grande Valley (LRGV) have plummeted this season as moisture conditions were not favorable due to a serious lack of rain in the region. Significant rain still had not been recorded as of this writing, resulting in a marginal crop outlook for LRGV cotton producers.
The Corpus Christi area also is experiencing dry conditions; however, with timely rain farmers could expect a fair cotton crop. Cotton producers in the Texas Upper Coastal Bend region were late in planting their crop, but adequate moisture has been received and prospects for the cotton crop are excellent, according to area analysts.
Meanwhile, limited rainfall during May, prime cotton planting time and historically one of the two wettest months of the year, has raised uneasiness about dryland cotton crop prospects on the Texas High Plains.
A sizable portion of the dryland acreage in the area in late May had marginal or insufficient surface moisture for planting, though agricultural specialists generally rated subsoil moisture good to excellent. A continued lack of moisture could seriously affect the region’s cotton output. Dryland cotton in the region normally comprises approximately 45 percent of the cotton acreage on the High Plains and slightly more than 90 percent of the area devoted to cotton in the adjoining Rolling Plains. Last year, the combined irrigated and dryland cotton acreage on the High and Rolling Plains accounted for 77 percent of cotton plantings in Texas and 30 percent of cotton acreage nationwide.
Soaking rains drenched the area in late April, but hot, windy conditions quickly took a toll on surface moisture. Later, unseasonably cold conditions slowed emergence and development of irrigated cotton and some chill injury was reported. Ample subsoil moisture reserves might prove of little value for the 2002 cotton crop if dryland growers are unable to establish their cotton crop in a timely fashion. However, all optimism is not lost for the upcoming season.
“If cotton can be successfully planted, escape destruction from hail and wind, and extend its roots into plentiful deep moisture, one summer rain at the right time could be enough to produce a dryland crop, though more would be needed for optimum yields,” an area cotton analyst says.