The weather has been turning increasingly more bullish for cotton.
It's been very dry, almost no rain the last 2 months in the TX panhandle and this will continue with heat the next 2 weeks.
The crop deteriorated by 7% yesterday, mostly from this.
Texas is by far the biggest cotton producer in the US. It's tricky trading weather with cotton as it can trade on other factors, including global prices and crude.
The China tariffs are also a huge bearish factor for cotton.
A lot more later this afternoon!
Here is a production map for cotton. This one shows the % production by state.
Texas produces 38% of the cotton crop and most of that is grown in the panhandle, so the weather there is huge.
Georgia is a distant 2nd, producing less than half of what TX does.
It's been very dry in the panhandle of Texas the past 2 months, with some modest drought conditions developing as a result(yellow shade on map 2).
This is nothing new for that area which has a hard time getting moisture from the Gulf to meet weather systems, so its one of the drier and hotter places in the country and cotton can withstand heat and does ok with rains a bit below normal but still needs rains.
Cotton, because its a woody stemmed plant benefits even more than the average crop from the increase in CO2. So cotton is doing much better right now with todays atmosphere than it would be doing if it had the atmosphere of 100 years ago to grow in.........all things equal.
See the thousands of studies for different plants here:
But cotton does need some rain and the lack of it the past 2 months is finally catching up.
Yesterdays national crop rating dropped 7% from the previous week from 61% to 54% good to excellent vs last years crop rating of 40%.
It was all from the TX panhandle drought with the TX rating dropping a whopping 13% in just 1 week! Most of that went into the fair condition but 4% went into the poor category.
Crop ratings from yesterday:
Crop ratings from last week:
The price charts below are not very good. I think they use October and they don't show the spike bottom on Monday, which was over a penny lower than where we traded today.
What they do show is the huge downtrend since the major top just over a year ago. Prices have crashed to some major support of lows around 3 years ago.
Getting below that would mean prices that are the lowest in 9 years.
I am not in touch with cotton fundamentals but would guess that world production has been very good and our exports to China have likely plunged.
Historical price perspective on cotton. Charts below.