PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 11:02 UK, 27th Jun 2017, by Mike Verdin
Texas rains ease cotton market nerves, after US crop rating falls anew

Ideas of more benign weather for the US cotton belt eased investor nerves, after a week when the crop faced setbacks ranging from "serious damage" from dryness to a battering from Tropical Storm Cindy.

The US Department of Agriculture rated at 57%, the proportion of domestic cotton rated "good" or "excellent" as of Sunday, a drop of 4 points week on week.

While still an above-average reading, with the mean at about 52-53% for the time of year, the figure underlined the extent of the deterioration in a cotton crop which had two weeks ago rated as 66% good or excellent easily the highest figure for mid-June on data going back to 1995.

However, the unusually rapid deterioration reflects a series of setbacks from weather extremes.

It also tallies with persistent market talk that the US crop was not in as good health as official data had suggested, although expectations remain of a strong harvest this year - as reflected in a drop in futures prices this month.

'Rain and wind damage'

In the latest week, the good or excellent rating on the Louisiana crop dropped by 6 points to 61% as the state battled with the landfall of Tropical Storm Cindy, with one USDA scout reporting that the tempest "brought rain and wind damage".

The state received an average of 3.6 inches of rain last week, while the number of days suitable for fieldwork was limited to 2.1.

By contrast, the crop in Oklahoma deteriorated by 19 points to 76% good or excellent amid some return of dryness, with the USDA noting that in the state "topsoil and subsoil moisture conditions were rated mostly adequate to short".

'Serious damage'

In Texas, the top cotton-growing state, the reading fell by 4 points to 46%, well below the 52% figure a year ago, sapped by a range of setbacks ranging from dryness to pests.

"High winds and blowing sand were taking a toll on cotton seedlings in the Northern High Plains," USDA scouts said.

"Lack of moisture in areas of the Northern Low Plains was affecting cotton emergence and causing serious damage to emerged plants.

"Some cotton fields in the Upper Coast were having worm issues."

Market impact

Nonetheless, cotton futures for December staged only a modest recovery, adding 0.5% to 67.59 cents a pound in early deals in New York, amid ideas of better weather, including drier conditions for Louisiana, and with Texas having seen rain some relief.

"There looks to be a lot of rain over the West Texas region with some areas getting 1-2 inches," said Ecom.

"It looks like most of the US growing areas is getting a nice amount of rain which should help the growers with their crops moving forward," the trading house said, if adding that "there have been reports of big storms and hail.

"However, it is too early to know if there has been any significant crop damage."

At Commonwealth Bank of Australia, Tobin Gorey said that the US cotton crop condition "is still broadly in good shape", despite its recent deterioration.

Sowings data ahead

The data come amid some debate too over the prospect on Friday of much-anticipated USDA statistics on US sowings of crops including cotton, for which seedings are currently estimated by officials at 12.2m acres.

 At Rose Commodity Group, Louis Rose said that "although we still have some fine-tuning to do on our planted acreage estimate, we think that the USDA will estimate planted area at around 12m acres.

"However, despite weekend rains, the current official 10% abandonment rate across Texas will likely have to be revisited."

The USDA is currently estimated overall US harvested area of cotton at 11.38m acres, implying an abandonment of 7.0%.

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