Interviews
Cotton 2008/09 outlook
11 Dec '07
2 min read
U.S. Forecast. Competition for 2008 acreage among cotton, feed grains, soybeans, and wheat still suggests rising 2008 cotton prices relative to the alternative crops. As growers finalize these planting decisions, the cotton market's focus will shift to planted acreage reports, weather, crop condition, and the uncertainties related to new crop cotton supplies.
The eastern and far western portions of the cotton belt are still in a major drought, and the south central region is having a relatively dry winter. If the dryness persists, it could influence whether winter wheat is kept until harvest, adjust spring crop planting decisions, and ultimately erode crop yield potential.
Assuming 10 million acres are planted, a normal abandonment and 800 lb/acre average yields could result in a 15 million bale U.S. crop. This would probably create a substantial reduction in U.S. carryover stocks, down to around 5 million bales. Such an outcome would support December 2008 cotton futures at or above the mid 60 cent range.
However, in the last two years the fund sector has demonstrated its ability to inspire a surge in commodity prices. Although often short lived, such speculative rallies have the potential to spike crop futures between 75 and 80 cents.
The eastern and far western portions of the cotton belt are still in a major drought, and the south central region is having a relatively dry winter. If the dryness persists, it could influence whether winter wheat is kept until harvest, adjust spring crop planting decisions, and ultimately erode crop yield potential.
Assuming 10 million acres are planted, a normal abandonment and 800 lb/acre average yields could result in a 15 million bale U.S. crop. This would probably create a substantial reduction in U.S. carryover stocks, down to around 5 million bales. Such an outcome would support December 2008 cotton futures at or above the mid 60 cent range.
However, in the last two years the fund sector has demonstrated its ability to inspire a surge in commodity prices. Although often short lived, such speculative rallies have the potential to spike crop futures between 75 and 80 cents.
Texas A&M University
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