We’re talking cotton this week, along with a look at local cash cattle.
Cotton
Cotton has always been an important crop on the Texas South Plains, and over the last five years it has become an increasingly important crop north of I-40. ICE DEC ’20 Cotton futures saw a run this week, closing up 1.67% at about $0.65/lb. The steep decline on Monday met support on the 9-day moving average and turned north. This increase led the contract above the upper of the Bollinger channel (light purple line in the figure below). The stochastics indicate that the contract is overbought, but the directional movement indicators show trending positive movement. Given the condensed trading range we saw today, I could see range bound movement to a small reversal next week.
ICE DEC ’20 Cotton Futures
That being said, a fundamental market signal could change the picture. Some of the development in price this week likely came from ‘hopeful’ news on trade negotiations with China. As of writing, Beijing and DC have verbally tossed about a ‘mini-deal’ that focuses, for the U.S., on agricultural purchases as a jumping-off point for more negotiations. Since at least 2014 China has been the number one or number two export destination for U.S. cotton. Any deal that expands access to the Chinese market will be bullish for price.
Additionally, a U.S. trade delegation is in Vietnam discussing trade terms. Since 2014, if China was not the number one destination for U.S. exported cotton, Vietnam took the top spot. Collectively, Vietnam and China were responsible for 35% of the cotton exported from the U.S. from 2014-2018.
Crop conditions remain relatively improved over the previous year nationwide. Texas conditions are not as good as the national average, with 26% rated good to excellent compared to the national average of 38%.
Cotton Conditions, 10/7/19-10/11/19
Cash Cattle
Cash price for #1 Med-Large feeders were mixed compared to the previous week. Calves below 500 lbs. saw a slight increase in price on the High Plains. Animals heavier than 500 lbs. declined, with the average price across the three High Plains AMS auctions retreating $4/cwt for 6-7 weight steers, and declining $9/cwt for 7-8 weights. That price dip was driven by the glut we’re still seeing on 7-8 weights to close out the summer and and start the fall.
Cash Price 10/14/19-10/18/19, Combined Tulia, Dalhart, Amarillo Auctions
In the News:
BEEF – “Phase One” of China Deal: What can we expect?
BEEF – Beef Quality Price Spreads WidenÂ
Upcoming Dates:
October 21 – Crop Progress
October 25 – Cattle on Feed, NASS
November 7 – Texas A&M AgriLife Extension Southwest Dairy Days (Register Here)
January 5-11 – The Executive Program for Agricultural Producers (Register Here)
February 6-7 – Developing this Year’s Marketing Plan for Feed Grains and Cotton, Amarillo AgriLife Research & Extension Center