LUBBOCK, TX – While USDA is projecting a 17.5 million bale cotton crop this season, domestically, there’s a tug-of-war between bullish and bearish news that may drive the markets for the remainder of 2020.
For example, there’s a lot of cotton in the world. According to Kevin Brinkley with Plains Cotton Cooperative Association (PCCA), there are 69 million bales of cotton in the world today – and that’s without trying to count what’s in China right now. That’s bearish.
A significant drought event is causing high rates of abandonment in cotton fields on the High Plains. Though a recent estimate from Plains Cotton Growers pegged the losses at 75 percent of the 2020 dryland crop, Brinkley says that could be a charitable assessment for losses. That’s bullish.
The fact that the High Plains grows the majority of the cotton in the United States does lend itself to higher prices when the region experiences a “train wreck” of sorts.
Unfortunately this year, crops outside that region are in great shape. The crop in Oklahoma and Texas are in good shape, as is the irrigated crop in Texas. Also, the Southeast has seen ideal growing conditions, and a tropical event this time of year usually assists the cotton crop. Again, bearish news.
Probably the most bearish scenario is developing in Brazil and India where local crops are in good shape and worldwide demand is falling in reaction to “stay at home” orders due to Covid-19.
(SOURCE: All Ag News)