Cotton Marketing News: Market Optimism May Also Fuel Uncertainties

Jan 11, 2021

By Don Shurley

2020 is now in the rear view mirror. We gladly say good riddance, as 2020 was not a good year for many and for many reasons. 2021 brings hope of better outcomes.

Old-crop March futures have now reached the 80-cent area. The recovery in prices since the lows in late March-early April has been phenomenal and much welcomed, and is continuing to provide growers with marketing opportunities earlier thought not likely.

The uptrend in price, at least more recently, seems to be brought about by increased optimism in demand, the outlook for Use, and the smaller US crop (finally validated last month by USDA) that may get even a little smaller.

Commodities are also being aided by declining value of the US dollar, which makes our exports cheaper to foreign markets. The Dollar Index declined for most of 2020 and continues to do so into 2021—down 5 points since September, 10 points since last March.

It seems also that cotton is being supported or “carried along” by strong prices for alternative crops, such as corn and soybeans. While cotton is now pushing 80 cents, old crop corn is currently pushing close to $5 and soybeans $13.50.

As already mentioned, one factor in the price rally is optimism about demand and the anticipation of improved Use—in-part because of the COVID vaccine and hopefully better control of the spread and lowering numbers here and globally.

This week’s export report, released today, was expected to show strong numbers. Today’s report (for the week ending Dec 31) showed net sales of 164,100 bales and shipments of 291,000 bales. Sales were down 47% from the prior week and 60% from the previous month. Shipments were down 3% from the prior week and 6% from the previous month. This report was weaker than expected, but the market today was down only slightly.

Respondents to the Cotton Grower magazine survey expect US cotton acres to decline slightly for 2021. One of the main reasons given is high prices for alternative crops. Both corn to cotton and soybean to cotton price ratios are higher now than this time last year—meaning only that currently, corn and soybean prices have increased more relative to cotton. Basis was not considered.

Peanut prices are also expected to increase for 2021. Acres were increased in 2020, so any further increase could be limited due to rotations.

National Cotton Council acreage projections will come out during their Feb 12-14 annual meeting. USDA’s Prospective Plantings report will be out on March 31.

Optimism and expectations for remaining old-crop cotton and the 2021 crop are running high. With higher expectations sometimes also comes increased risk, uncertainty, and potential error. However, if 2021 acres are kept in check and if Use continues to rebound, that scenario could keep 2021 prices supported.

Source : ufl.edu

Video: Why Rob Saik is Trying to Build the World’s Most Connected Agriculture Network

In a recent interview at the SeedLink Conference in Brandon, Man., Rob Saik, author, speaker, and CEO of AGvisorPRO, took a trip down memory lane, reminiscing about the beginnings of his career and what the future holds.

Graduating from the University of Alberta in 1983, Saik embarked on a journey that started in Brandon, Man. “I got a job with Elanko, got a U-Haul truck, threw everything I had into it, drove to the Victoria Inn, and lived there for three months while they tried to find an apartment for me to move into. So I started my career in Brandon,” Saik shared.

Fast forward to the present, Saik has evolved into an accomplished author and speaker, traversing the globe to engage in high-level discussions about the future of agriculture and the critical role it plays in feeding the world. Yet, despite his global presence, he finds himself back in Brandon, addressing a group of seed growers. But why? Saik emphasizes the fundamental importance of seeds, stating, “It all begins with a seed, doesn’t it?”

Reflecting on his own experiences as a farmer, Saik expresses his excitement when a planted seed germinates and evolves into a thriving crop. He underscores the significance of technology and breeding in seed development, recognizing the crucial role they play in ensuring farmers can propagate seeds, grow profitable crops, and contribute to global food security.

Saik delves into the challenges faced by the agricultural community, particularly the rapid pace of technological advancements. He believes that the key lies in connecting farmers to experts swiftly, boosting farmers’ confidence in adopting new technologies, and ensuring the timely implementation of these advancements. According to Saik, this approach is crucial for steering agriculture towards sustainability and profitability.

As Saik works on his upcoming book, tentatively titled prAGmatic, he sheds light on its central theme. “The thesis would be that I want to write a book that takes what the consumer wants, challenges what the consumer believes, and positions that against what the farmers can actually do pragmatically,” he explains. The book aims to bridge the gap between consumer expectations and the realistic capabilities of farmers, promoting sustainable intensification as the necessary path to feed the planet.

Looking ahead to 2024, Saik emphasizes the need for enhanced connectivity within the seed industry. He discusses his platform, AgvisorPro, which is designed to facilitate connections between farmers, experts, and companies in a way that transcends conventional social media platforms. Saik envisions a credible, connected agricultural network that goes beyond the noise of platforms like LinkedIn or Twitter.

In a passionate vision for the future, Saik imagines a tool for teachers that allows them to pose questions from students, answered by verified farmers and ranchers. This, he believes, would provide an authentic and valuable educational resource, connecting classrooms with individuals who truly understand the intricacies of agriculture.