Cotton futures prices felt pressure Monday ahead of USDA’s latest harvest update in its weekly crop progress report. USDA says 17% of nation's cotton crop is picked, four points ahead of the five-year average.
John Payne, a broker with Daniels Ag Marketing, told AgDay host Clinton Griffiths that except for a couple of bad storms, this cotton crop looks big.
"We could be looking at carry outs that are double what they were a year ago," says Payne. "We're looking at almost 1.5 bales an acre, which is substantially higher than where we've ever been before."
However, hurricanes and recent rains in the Panhandle are still unknowns.
"I have a couple guys down there who called me sitting on five inches of rain [last week] just watching the fields go under water," says Payne. "This isn't the time of the year for that."
Payne says cotton growers will want to focus on this month's crop production report from USDA.
"We're going to get some data on what happened with Harvey and then the downgrade on the Georgia crop," says Payne. "If you take those two events out, this has been a fantastic growing season for cotton."
Hurricane Harvey blew unpicked cotton and modules to pieces and bales sat submerged in water following the storm.
"The folks up in the northwest part of Texas are sitting on fantastic production regardless of how much damage are we looking at," says Payne. "If we lose a million bales, we could simply find ourselves right back to where we thought we would be a month ago."
Even so, prices remain substantially higher than last year.
"A year ago, we made our lows at this time of the year," says Payne. "We're more likely to make our highs this year in the next couple months."
He is cautious given the size of the expected crop.
"We expect some downside risk to come," says Payne. " [If]those forecasts around Lubbock turn
s bad, I think the market rallies."
Payne is still positive about cotton in the near term.
"Cotton is the rosy story on the U.S. ag side right now, especially [compared to other] summer row crops," says Payne. "There isn't a lot of profit margin in any of the [other] markets, but cotton has it and you're going to continue to find production in the coming years."