Friday, Lubbock, Texas By Shawn Wade
Early dryland returns are fueling positive thoughts about the 2010 crop and the possibility that the High Plains of Texas could meet or exceed the USDA estimated 6.08 million bales forecast last month.
With an outstanding September now past, the main question begging for an answer is whether or not the crop surveys that will influence next week's USDA Crop Production report will make a significant difference in official crop prospects, upward or down.
The majority of the cotton ready to harvest at this time is non-irrigated, although some irrigated fields may be ready to go any day. So far preliminary yield reports from growers that have started harvesting some of that dryland acreage has been mostly positive.
According to grower reports most of the acreage harvested to date appears to be yielding at least a bale per acre, with the highest estimates thus far topping out at around the 1 and one-half bales per acre. Assuming that trend holds as additional acres are brought in, the High Plains would be well positioned to meet the last production estimate.
An important note on yields, though, is that not every dryland acre on the High Plains will manage to get close to the bale per acre average that is needed for the area to hit 6 million bales. In fact, scattered areas of dryland production throughout the region are expected to produce yields of a half-bale or less due to a variety of circumstances.
The feeling in the country now that some of this cotton is yielding more cotton than initially expected, is that for every acre of low-yielding dryland cotton there is most likely an acre of cotton that will yield a bale or more.
Add in the excellent prospects that exist for the irrigated crop and it appears that High Plains cotton producers are on the verge of a very busy, and fruitful, harvest season. Add in the fact that many growers were able to secure what would be considered historically favorable prices on a big portion of their 2010 cotton and the situation begins to look even better.
Because of the ability of growers to price a fair portion of the 2010 crop early in the season, 2010-crop cotton is now in a fairly tight supply situation with strong demand continuing to support higher cash prices.
Growers that held back some portion of their crop to price closer to harvest, are probably going to be able to leverage this strong demand for free cotton into higher prices in the near term. That, in turn, should help them bring their overall average price received on 2010-crop cotton up a little more.
More importantly, though, is the fact that the tight supplies and higher prices that are making headlines now may actually have a bigger, and more lasting impact, on the 2011-crop growers haven't even planted yet.
With the 2010 crop not expected to linger on the market for very long, marketing opportunities for the 2011-crop have already begun to surface. How long those opportunities last will largely be influenced by how cotton acreage shifts around the world.
For many growers, deciding when and at what level they will engage in the marketing of their 2011 crop may be one of their biggest challenges and one they may need to consider long before they finish harvesting their 2010 crop.
Friday, Lubbock, Texas By Shawn Wade
USDA has released the first 2010 marketing year data for sales and prices but still working on the final 2009-marketng year Average Price Received information that most growers are much more interested in seeing.
Final word on the 2009 Weighted Average Price Received by Growers should come next Friday, October 8 when the National Agricultural Statics Service publishes the final Upland cotton marketing and average price received data for the 2009 Upland cotton marketing year.
The reason so many growers are interested is that the possibility exists for revisions to previously released data to influence the 2009 CC payment rate enough to either trigger repayment of all or part of the 2009 Advance CC payment or solidify prospects for a modest additional payment for 2009.
The 2009 Counter-cyclical payment rate authorized under the 2008 Farm Bill will be based on the 12-month Weighted Average Price Received by growers. For cotton the 12-month Weighted Average Price will reflect price and marketings for the 2008 marketing year. The 2009 cotton marketing year began August 1, 2009 and ended July 31, 2010.
The lack of interest in the August 2010 marketing numbers, which totaled 387,000 bales sold at an average price of 77.2 cents per pound, isn't unexpected due to the fact that growers have been watching the cotton market advance steadily since the start of the 2010 marketing year to eclipse the 90-cent mark and, more recently, trade above $1 per pound.
With that kind of start, and prospects for supportive supply/demand forces going forward, there appear to be very few scenarios that could create a 2010 Counter-cyclical payment.