Interviews
Warm conditions to affect cotton yield potential - WASDE
04 Sep '07
3 min read
The September WASDE report (due Wednesday Sept. 12) should refine the picture of the West Texas yield potential. Still, the production possibilities in that region will likely be mixed (following the variable rainfall pattern), and the ultimate yield potential still depends on having sunny and warm conditions all this month and into the next, while avoiding an early (i.e., pre-Halloween) hard freeze.
The realizations of U.S. supply (and hence price volatility) are historically influenced during this August/September time frame, as shown by the last four December contract price patterns.
Under the influence of the current 27.23% stocks-to-use forecast plus various external forces, the Dec07 contract is trading above the Dec06 (which had a 21.66% stocks-to-use forecast at this same this time period in 2006) as well as Dec04 (with 32.96% forecasted stocks-to-use) and Dec05 (at 33.65% forecasted stocks-to-use).
The differences between these trading ranges could be due to speculative forces (i.e., buying or selling beyond the fundamental rationale) or simply differing perceptions about how supply/demand conditions might be changing.
Even if the supply/demand forecast points to Dec07 being reasonably priced, upside price volatility is likely given the trend of tightening foreign stocks which could lead to price spikes given the perception of supply problems here or abroad. The low U.S. planted acreage in 2007 heightens the focus on U.S. yieldpotential, as predicted by weather and crop condition.
The realizations of U.S. supply (and hence price volatility) are historically influenced during this August/September time frame, as shown by the last four December contract price patterns.
Under the influence of the current 27.23% stocks-to-use forecast plus various external forces, the Dec07 contract is trading above the Dec06 (which had a 21.66% stocks-to-use forecast at this same this time period in 2006) as well as Dec04 (with 32.96% forecasted stocks-to-use) and Dec05 (at 33.65% forecasted stocks-to-use).
The differences between these trading ranges could be due to speculative forces (i.e., buying or selling beyond the fundamental rationale) or simply differing perceptions about how supply/demand conditions might be changing.
Even if the supply/demand forecast points to Dec07 being reasonably priced, upside price volatility is likely given the trend of tightening foreign stocks which could lead to price spikes given the perception of supply problems here or abroad. The low U.S. planted acreage in 2007 heightens the focus on U.S. yieldpotential, as predicted by weather and crop condition.
Popular News
Leave your Comments
Editor’s Pick
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
