The cotton condition rating rebounded one point this week to 51% good to excellent. That compares to the long-term average that sits just below at 50%. It is above last year at 47%. Crop rated poor to very poor was unchanged at 16%.
Among the major states, six states improved, five states were unchanged, and four states declined. Texas was up one point to 36%. The largest increase was South Carolina by 3 to 78%. As for the largest loss, it was spread among four states each down one point. Most states have either completed boll setting or are within a few points. Kansas is the exception at 55%. Bolls opening are at 19% versus the average at 18%.
Futures rallied smartly this week, with the December contract punching close to overhead resistance at 68 before breaking hard Thursday despite excellent weekly export sales reported. They were near 250,000 bales and YTD cotton sales are already at 50% of USDA’s current forecast, versus the 5-year average of just 41% for this point in the marketing year.
That works out to more than 960,000 bales “ahead of schedule” you might say and hints strongly that USDA will raise its export forecast in the September WASDE report and likely cut ending stocks unless the export hike is neutered by an increase in its U.S. production estimate, which few rule out.
So why did Thursday cotton futures drop in the face of excellent export sales? News from China. That country announced a target price for its farmers of $1.29 per lb. which will surely sustain cotton acreage there going forward. Further, China estimated this year’s crop at 30.9 million bales, up from USDA’s current forecast of 29.5 million. It puts into question how much more U.S. cotton China will be buying. India has a huge crop coming as well. We continue to view pre-harvest price strength as a catch-up selling opportunity.
