Latest news from the cotton front
Cotton futures extended their rally, as concerns grow about the slow progress of the Indian monsoon. December New York cotton futures, the most widely traded contract, hit a 14-month high of 66.64 cents a pound
Analysts noted the slow progress of the monsoon in India, which could hurt cotton production prospects there.
Hot weather in India
“India has been abnormally hot and dry of late,” said Tobin Gorey, at Commonwealth Bank of Australia. Meteorologists say monsoonal rains have been slow to advance into central and northern areas. Dry soils in those regions will likely limit planting activity until conditions improve toward the end of the month,” Gorey said.
India is badly in need of rain, after two consecutive weak monsoons in 2014 and 2015.
Even with the recent delays, India is still expected to see above average rain coverage over this monsoon. But with the country’s reservoirs severely depleted over the last two years, supplies will be needed to replenish water for irrigation, as well as improve soil moisture.
Northern hemisphere worries
This week the President of the Cotton Association of India said that Indian cotton planting was expected to fall to a seven year low of 11.0 million hectares in 2016-17.
Sowing was expected to fall due to a 7 % drop in planted area, as parasite threats to cotton encourage farmers to switch hectares to other row crops such as peanuts and pulses.
And planting hopes have been disappointing elsewhere. “Internationally, planting operations are winding down across the northern hemisphere,” said cotton analyst Louis Rose.
Egyptian acres fall
“Early on, sources from China report that weather there has been less than ideal for cotton, to date, while the Indian monsoon continues to stall,” said Rose. In Egypt, farmers are expected to commit the smallest area ever to cotton with expected production now at just below 400,000 bales,” Rose noted.
The US cotton belt is seeing weather threats as well. Rose noted that “hot and dry conditions seem to be the order of the weekend with temperatures in Memphis, Tennessee expected to flirt with the century mark while 100+ degrees Fahrenheit temperatures are almost a certainty across western Texas”.
December cotton futures were up 1.7 % on the day (June 17, 2016) in mid-day deals, at 66.01 cents a pound.