USDA began reporting harvest progress three weeks ago. The first report came in at 6% harvested. And last week, it advanced only 2 points, to 8% harvested. Just another 2 points in today’s weekly report, to 10% harvested.
That’s 3 points below the 5-year average but 3 points ahead of last year’s sluggish pace. Persistent rains in the southern and central Plains states are the culprit. Quality problems are feared as well.
As for condition ratings on cotton still in the field, the portion rated good to excellent advanced a point, to 49%. That’s just a point better than the 5-year average but 5 points ahead of last year. About 18% of the crop is rated poor to very poor, the same as a week ago but down from 24% a year ago.
Indian officials pegged their crop 1.5 million bales higher than USDA’s latest forecast for that country. More bearish news last week came out of China in two installments. First they confirmed a plan to support producers with deficiency payments from a target price well above global price levels. But that was old news. The really bearish news was announcement by Beijing that they would sharply curtail import licenses for domestic mills, forcing those mills to start using up more of China’s enormous reserve stocks of more than 170% of annual usage, poor quality of those stocks notwithstanding.
However,officials also said they were going to put sales of reserve stocks on hold for several months and focus on purchase from farmers and sale of the new crop to domestic mills before putting older reserve cotton on the market.
Globally, ending stocks add up to just under a year’s worth of consumption when it takes under a 90-day supply just to hit the threshold of what traders consider as a buffer against problems with production the following crop year. With futures sagging to the lowest levels in 5 seasons last week and so much of the harvest still ahead, we’re back to suspecting December will dip below 60 cents before bottoming out. Further, any seasonal rebound this year will be tepid at best. The only hope for a serious price recovery would be an unexpected drop in global acreage and/or crop problems with the 2015 crop.