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Cotton futures lag gains in soy, cotton as US crop jitters ease

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July 18th, 2017

Cotton futures lagged strong rises in other crops as official US data eased concerns over crop losses in Texas, the top producing state, provoked by a producer report of damage from "high winds and hail".

Cotton futures for December added 0.6% to 68.15 cents a pound, lagging rises of 1.4% to $10.11 a bushel for Chicago-traded soybean futures for November, and a 2.7% surge to $3.98 ½ a bushel in December corn.

While the US Department of Agriculture overnight, in a much-watched weekly report on US crop progress, marked down by 1 point its estimates for the proportion of all three crops rated in "good" or "excellent" condition, for cotton, investors had already sent futures in the last session up by 1.8% on crop worries in Texas.

However, the data overnight showed the overall US cotton crop still rated 60% good or excellent, well above the five-year average of 50% for the time of year.

Cotton Futures: 'High winds and hail'

While the rating for Texas did drop by 2 points week on week to 49% seen as good or excellent, the impact was somewhat offset by improvements elsewhere, including in Louisiana, where warmth and rains saw the rating jump by 8 points to 82%, and in Mississippi, where it gained 6 points to 68%.

And in Texas, comments from USDA scouts fell short of flagging serious crop concerns, although saying that "some cotton fields in the Plains were behind in terms of growth" while in parts of the south east of the state "cotton was being heavily irrigated".

The comments contrast with those at the weekend from Plains Cotton Growers, a Texas-based producers' group, which said that cotton crop progress in High Plains, in the north of the state, "is all over the board.

"Mother Nature hasn't exactly been co-operative this season, as some good rains have been accompanied by high winds and hail.

"Some growers have devoted much of the past several weeks to simply getting their cotton crop started and keeping it alive."

Cotton Futures: Crop abandonment

The association flagged the potential for a cotton area abandonment levels in the area of "our overall average of 18-20%, perhaps a bit higher", in the 41 counties it covers, thanks largely to damage from a hail storm two weeks ago.

While some cotton "could recover… some of it definitely is gone," being replaced with fresh cotton, or alternatives such as sorghum or sunflowers.

At Commonwealth Bank of Australia, Tobin Gorey said that "to have all that loss with one storm is unusual. And there is potential losses to dry weather now".

The USDA is factoring in an abandonment level of 7% for the US cotton crop as a whole.

Cotton Futures: Indian losses

Mr Gorey also flagged talk of cotton crop losses in India to floods.

"Good monsoon rains are required each year but the weekend accumulations were too much, too quickly," he said.

"Ag meteorologists reckon some of the crop is lost but also point out that re planting is still possible."

 - Mike Verdin at Agrimoney.

See Also: Coffee, Cocoa, Cotton, Orange Juice, Sugar