Just how cold was it in the southern US cotton belt this weekend?
It looks like meteorologists got it right, that frost would indeed provide, yet another, weather test for cotton in Texas, which produces roughly half of production in the US, the top exporting country.
According to Tobin Gorey at Commonwealth Bank of Australia, west Texas cotton regions did indeed see “temperatures plunge to freezing levels over the weekend”.
“The freezes are were largely in line with forecasts, but did not get quite as far south as forecasters were expecting.”
At Ecom’s Australian office, traders said that “the forecasts from earlier in the week were mostly spot on in terms of where and how cold it would get”.
Commodity Weather Group said that the frost was enough to cause “minor cotton damage”.
‘Put Aussie cotton back on the map’
So where now?
Mr Gorey was not optimistic on cotton prices, saying while some cotton may have been lost “whether it is enough to keep prices at these levels in open question.
“We, for choice, expect prices to weaken a little. And another test of the lows in 66s [cents per pound] is now likely.
Ecom said that “currently we are thinking that the freezes and cold weather could affect the quality more than the crop yield”, a prospect which would be supportive for Australian prices.
“Australian cotton is known for its premium quality.
“So if the US sees some quality issues then it would put Aussie cotton back on the map as the preferred supplier of high quality superior cotton.”
‘Quality continues to be excellent’
Still, there were tests of both ideas.
In early deals on Monday, New York cotton futures appeared to be turning their back on a fall back to lows, trading higher, if by a modest 0.2% to 68.35 cents a pound.
As for the quality question, although that in parts of Texas may be compromised, in Georgia, the second-ranking state, it looks strong, after the classing of 300,000 bales, an estimated 12.5% of the state’s crop this year.
“Quality continues to be excellent, probably as good as I can remember,” said Ron Lee, at Georgia-based McCleskey Cotton.
Still, the cold weather threat is not over yet, with some frost cautions around for some US cotton-growing areas this morning too.