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April 2016 Cotton Leader

April 29th, 2016

Cover Crop Survey Opportunity

A nationwide survey of farmers on cover crop use is seeking insight from growers around the country — whether or not they plant cover crops.

The Cotton Board is cooperating with USDA-SARE (Sustainable Agriculture Research & Education) by making a survey available to cotton growers that will enable them to share information about their use of cover crops. The survey can be taken online at http://tinyurl.com/ccsurvey2016  until May 1, 2016.  All answers to the survey are anonymous. Participants who complete the 10 minute survey have the option of entering into a drawing for a $100 gift card. Cover crops have long been recognized as a means to conserve soil, and recently interest in integrating cover crops in weed management systems has increased. Since cover crops reduce erosion, increase water retention and soil tilth, and help increase soil organic matter, their use is compatible with the sustainability goals promoted by the Cotton LEADS program. The Cotton Board encourages growers to help USDA-SARE acquire information about use of cover crops in cotton.

New Focus on Cotton Webcast Introduces Growers to Cotton Incorporated’s ‘Cotton Cultivated’ Website

Last year, Cotton Incorporated launched a new Web site to give the cotton growing community quick and easy access to important cotton information, Cotton Cultivated (cottoncultivated.cottoninc.com).  A new Focus on Cotton webcast titled “Overview of Cotton Incorporated's Cotton Cultivated Website” introduces cotton growers, consultants, and other industry experts to this tool that makes it easy to find cotton-specific information, including:  

  • Daily monitoring data and reports
  • Research results and recommendations
  • News from trusted sources

 This 6-minute talk by Ryan Kurtz, Director of Agricultural & Environmental Research at Cotton Incorporated, provides information that helps users navigate the website, filter information by region or topic, and quickly locate reliable cotton production information.


This presentation is available at no charge, courtesy of Cotton Incorporated, through the ‘Focus on Cotton’ webcast resource located at the Plant Management Network,http://www.plantmanagementnetwork.org/foco.  ‘Focus on Cotton’ contains over 35 webcasts on various aspects of cotton crop management. These talks--freely accessible 24 hours a day, 7 days a week--cover agronomic practices, crop protection, and ag engineering.  This resource also features a new and improved Cotton Extension Search tool, where users can conveniently search for extension resources across all U.S. land-grant universities serving cotton producers.  

U.S. Cotton Importer and Industry Advocate Retires

Former Cotton Board Importer Member, Maureen Gray, has retired from the Ralph Lauren Corporation. Gray, a strong advocate for the U.S. cotton industry, started with Ralph Lauren in 1997 and at the time of her retirement served as Vice President of International Trade.Gray served on The Cotton Board for 13 years and had a significant impact during those years."The Cotton Board relies heavily on the expertise and insight of our Importer Members, who represent various major U.S. brands and retailers.  Since she joined the Cotton Board, Maureen has consistently been a strong voice for our Importer Members and has brought their knowledge and expertise to the table.

Maureen’s impact on the board has been substantial.  She will be missed both personally and professionally," said Cotton Board Chairman and California cotton producer Aaron Barcellos.

Louisiana Cotton Producer and current Cotton Board Secretary George LaCour worked alongside Gray for many years on the Board. "I have been impressed with Maureen Gray since I met her. Maureen's ability to see the issues facing the cotton industry from a global perspective has been very valuable to our organization.  She truly cares about our industry and works hard to help us promote the use of cotton. My only wish is that every cotton producer would get the chance to meet her. I would like to thank Maureen for all of the time she has donated to helping the U.S. cotton producer gain market share," he said.

The Cotton Board's Vice President of Importer Services, Elizabeth King, worked closely with Gray over the years on the Importer Support Committee of the Board. She said, " I will truly miss Maureen’s wise counsel, generous spirit, and commitment to The Cotton Board.  She has been an invaluable resource to me both professionally and personally and I wish her all the best in her retirement."

Gray, who was also a strong advocate for the industry’s issues in Washington, became chairwoman of the U.S. Fashion Industry Association in 2011, where she will remain until the board votes on a new chair later this year.

Monthly Economic Update

Most benchmark prices were flat or higher over the past month. An exception was the China Cotton (CC) Index, which continued to decline.

Values for the most actively-traded July NY futures contract rose from levels near 57 cents/lb to those near 61 cents/lb. This round of increases lifted NY futures over 60 cents/lb for the first time since mid-February.
The A Index also increased about three cents/lb, with recent values near 68 cents/lb.

In international terms, the China Cotton (CC) Index decreased slightly, falling from 84 to 82 cents/lb. In domestic terms, the CC Index declined from 12,000 RMB/ton to 11,700 RMB/ton.

Although levels have increased since early April, Chinese ZCE futures prices continue to signal declines in Chinese cotton prices in coming months. Values for the most actively traded September contract have been near 10,600 RMB/ton (74 cents/lb), which is about 1,100 RMB/ton or about 8 cents/lb below current cash prices represented by the CC Index.

Prices for the Indian Shankar-6 variety were flat to slightly higher in international terms, rising from 63 to 64 cents/lb. In local terms, values also increased slightly, climbing from 32,900 to 33,200 INR/candy.
Pakistani spot prices were stable, holding to values near 61 cents/lb in international terms and those near 5,250 PKR/maund in domestic terms.

SUPPLY, DEMAND, & TRADE

This month's USDA report was the first since September that did not feature declines to both production and consumption estimates. The world production figure was lowered 420,000 bales (from 100.2 to 99.8 million). If realized, this represents the first time since 2003/04 that production would be below 100 million bales. The global mill-use projection was increased 375,000 bales (from 109.2 to 109.6 million).

The reduction to the global harvest figure was a product of lower forecasts for Cote d'Ivoire (-200,000 bales, from 800,000 to 600,000), Mali (-110,000, from 1.1 million to 990,000), and Brazil (-100,000, from 6.7 to 6.6 million). The largest country-level revisions to mill-use figures included those for China (+500,000 bales, from 32.0 to 32.5 million), Pakistan (+500,000, from 9.6 to 10.1 million), Bangladesh (-100,000, from 5.8 to 5.7 million), Turkey (-100,000, from 6.4 to 6.3 million), and Indonesia (-400,000, from 3.2 to 2.8 million).

World trade figures were mostly unchanged at 34.9 million bales. The stability in the global import and export forecasts contrasts with the series of revisions for both imports and exports. The Pakistani estimate was increased 600,000 bales (from 2.3 to 2.9 million) due to the combination of strong demand for textile exports as well as the smaller crop that resulted from adverse growing conditions. The increase in Pakistani imports was mostly offset by reductions to figures for Indonesia (-400,000 bales, from 3.1 to 2.7 million), Bangladesh (-100,000, from 5.7 to 5.8 million), and India (-100,000, from 900,000 to 800,000). Notable revisions to export figures included those for India (+250,000 bales, from 5.5 to 5.8 million), Brazil (+100,000, from 4.2 to 4.3 million), Cote d'Ivoire (-150,000, from 800,000 to 650,000), and Mali (-200,000, from 1.2 to 1.0 million).

PRICE OUTLOOK

Despite indications that another round of sales from the Chinese reserve system will begin sometime later this month, price-related details concerning an upcoming auction have yet to be released. The absence of a price-related announcement has been cited as a potential reason that Chinese ZCE futures moved higher over the past week. In turn, the upward movement in Chinese futures could have lent support to NY futures and the A Index. Strong U.S. export sales data, a weaker dollar, and increases in prices for other commodities may have also contributed to recent gains.

Next month, price direction will be informed by the USDA's release of its first complete set of estimates for the upcoming 2016/17 crop year. Preliminary USDA figures released in late February, as well as early forecasts from private forecasters, suggest that acreage in China will decrease further but that acreage in other major producing countries should be flat to higher.

At the end of March, the USDA released results from its survey of U.S. producers and their planting expectations. Findings indicated that U.S. growers will plant 11% more cotton than last year. At 9.6 million acres, the amount forecast by the USDA survey is slightly higher than the volumes predicted by the National Cotton Council survey in early February and USDA analysts in late February.

Last year, wet weather prevented cotton from being planted in certain regions of Texas and the Mid-South. This year has also gotten off to a wet start. Whether or not wet conditions persist can be expected affect the volume of acres actually planted and whether or not the increase in U.S. production will be proportional to the increase in expected acreage. Pakistan and Indian crops also suffered from adverse conditions last year, with the weather, as well as pest infestations, negatively affecting production. Whether or not growing conditions return to normal in those countries can be expected to heavily influence whether or not the 5% increase in global production suggested by the USDA in their preliminary figures is realized.

Any increase in production, as well as any volume pushed out of Chinese reserves, will be added to globally available supply in the coming crop year. In a cautious demand environment featuring weak macroeconomic conditions as well as a reduced share of the fiber market, high levels of available supply can be expected to keep downward pressure on prices.

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