The combination of an approaching holiday and an approaching hurricane pushed cotton futures prices higher last week amid fears of further crop damage in the Delta and Southeast. However, the rally was short-lived as prices closed lower later in the week.
By the end of last week, then-Tropical Storm Gustav was expected to become a major hurricane when it entered the Gulf of Mexico with a projected path to make landfall anywhere from the Florida Panhandle to Southeast Texas, affecting prices across the south.
Drenching rain and high winds are the last things producers there want to see at a time when hot, dry weather is needed.
Moderate to heavy rains from the remnants of Tropical Storm Fay were reported throughout parts of the Southeast and Memphis territory last week. Water was standing in many fields, and any additional moisture will only make conditions worse.
The untimely precipitation has had an adverse effect on the maturing cotton crop, according to one publication, and many producers were reporting increased cases of boll rot and hard lock.
Such conditions could reduce yields, and clear skies and seasonable conditions are needed to help the crop reach final maturation.
Meanwhile, the growing season is nearing an end in the Far West. Bolls are opening in southwestern Arizona, and farmers are preparing for harvest. Seasonable temperatures returned to West Texas to help spur crop development, and precipitation was limited to isolated thunderstorms.
Other than last week's bullish move, the cotton market was mostly quiet from light trading volume and dull interest. One market observer said the bears are betting Gustav will cause little damage to the U.S. cotton crop and turn out to be a disappointment for the bulls.
The latest crop progress report from USDA indicated 48 percent of the U.S. crop was rated good to excellent for the week ending Aug. 24, unchanged from the previous week and only one percentage point behind last year. The department also noted 89 percent of the crop is setting bolls compared to 90 percent last year and the average of 94 percent.
U.S. cotton export sales totaled a net 268,000 bales in the week ending Aug. 21, up 46 percent from the previous week. The featured buyers were China at 76,700 bales, Indonesia at 34,700 bales, and Turkey at 28,200. Rounding out the list of top buyers were Vietnam and Bangladesh.
Export shipments for the week totaled 269,500 bales, unchanged from the previous week but two percent less than the prior four-week average. The primary destinations were China, Mexico and Turkey.
In other news, Angola's Ministry of Agriculture and Rural Development has announced plans to re-start cotton production. Prior to the country's independence in 1975, cotton production twice exceeded 137,700 bales. The government says it wants to supply the domestic textile industry while reducing dependence on imports and improve farm income.
The spot cotton market was much more active in the week ending Aug. 21 as producers in Texas, Oklahoma and Kansas sold 4,347 bales online compared to 22 bales the previous week. Average prices ranged from 57.76 to 63.87 cents per pound.