There is a threat to the cotton crop from the excessive rains produced by Florence.
Mainly in North Carolina at this point but possibly SC if the hurricane would track farther south. This has cotton up sharply today.
Below is a map of where cotton is grown and below that are the total rains for the next 7 days.
Historical perspective on cotton going back to different time frames. Price below is the front month.
The last GFS is a crazy outlier and causes the remnants of Florence to drift southwest into SC and even NE.Georgia.
Most of the other guidance moves things northward.
The latest 12z European model looks like the outlier 12z GFS from yesterday in taking Florence southwest into northeast Georgia.
This could be pretty bullish for cotton...........but the forecast track is different with each model run.
The latest 18z GFS, does not do this but each run of each model is changing. We have tremendous uncertainty about where Florence will go.
Here is another production map for cotton. This one shows the % production by state. The state at most risk from excessive rains is North Carolina. It only produces 5%. South Carolina produced another couple %, for making a total of something like 7%.
Rains in excess of 10 inches, possibly up to 20 inches in NC could result in a loss to national production of a couple %. There is a big USDA monthly crop production report at 11am Wednesday that will be taking center stage for trading between now and shortly after the release.
To get really bullish the cotton market, Florence would need to manage to go much farther south than even the most farther south model, the European model tracks it.........which is now in N.Georgia. A track into high producing S. Georgia would be a huge surprise but would cause a big upside price spike.
Models overnight took Florence farther southwest into Georgia and were more threatening to the crop in that location.
The farthest southwest and the best model so far has been the European model, which takes the storm all the way into central GA, which means a potential threat to the GA crop. This was supportive to cotton prices overnight and early this morning.
However there is a USDA report coming up at 11 am.
USDA cotton production +2% from previous report and bearish.
Maybe we can trade weather shortly............IF the market perceives excessive rains in the Southeast to have an impact on production.
That would be most likely to happen IF the remnants of Florence were to make it into S.Geogia and stall out with the heaviest rains. S.Georgia is a high production area vs areas north that are low production.
Another factor is that if the storm is moving, the heaviest rains will be more spread out. So even if it crosses into S.Georgia, if it gets that far south, it may mean the storm is moving more.
Anytime you have a very bearish USDA report and the remnants of a changing hurricane out at the same time, things will be volatile and especially in a market like cotton.
This was the crop condition report from Tuesday:
Cotton deteriorated a bit.
This is the latest on hurricane Florence.....................looking weaker than what was expected Tuesday!
I read somewhere that a major hit on N. Carolina is bad for S. Carolina in that rivers flow into the SC from NC.
I never thought of that. Wonder how much acreage that could effect. I just looked up some numbers from todays USDA stats.
SC is a very small cotton producer at around 2.9% of the US crop
NC is around 4.7%.
GA is 14.8%, mainly in the southern parts so if the hurricane ever got that far south it would be huge.
Those last 3 are up alot from last year.
TX at 34% is #1 by a wide margin.........of course its spread out in that huge state too but this is down from 46% last year.
December cotton is stuck in neutral as Hurricane Florence has/is making landfall. It has been suggested if North Carolina were to lose 25% of its crop, that amount would translate into a 200,000 bales reduction to the nation’s cotton crop.
However, whatever those eventual Carolina losses turn out to be, either more or less, they will not tally up until the October crop report Until then, the market will have to suffer under USDA’s latest crop report which increased the size of the crop by 560,000 bales.
Considering that the USDA report last week was about 650,000 bales larger than the average guess and that it is pretty unlikely that more than that many bales will end up being lost due to Flo in NC/SC/VA, we’re talking probably no worse than about a wash vs expectations prior to Flo. Dec CT is back down to being in the general vicinity of where it was prior to the Flo threat after rising rather sharply on Friday and Monday due to Flo’s threat to mainly the Carolinas. So, it is quite possible that the potentially large % of NC crop damage as well as some SC crop damage (more heavy rain and flooding related in the Carolinas than wind related I’d think) is already dialed in. As mentioned, the NC crop size is rather substantial even though it is much smaller than the GA crop. Then again, the bulk of the GA crop was hardly ever threatened by Flo. The market was concerned with the Carolinas and even the small VA crop to a much greater extent than GA imo.
Mike or anyone else, any more thoughts? Regardless of what the total losses turn out to be, I can’t help but feel for those who will end up with total or near total losses from the devastating floods in NC as those areas are still getting hit with as bad as it has ever been for them from a storm!