The Market’s Advice: Plant, Plant, Plant!

Mar 06, 2018

By Dr. O.A. Cleveland

Cotton, the fiber of choice – plant…plant…plant.

Cotton prices posted another impressive week to the upside as world demand continues to expand. U.S. cotton is enjoying an enviable position. While the supply of high grade cotton in the U.S. is limited this season (as throughout the world), the U.S. has an abundant supply of low grade cotton that is competing extremely favorably in the world market. Literally, the market U.S. low grades – the most contamination free in the world – is driving export demand higher with each passing week.

U.S. exports will increase well above the current USDA estimate of 14.5 million bales. Consequently, U.S. ending stocks will be substantially lower than the current bloated USDA estimate of 6.0 million bales.

Granted, USDA estimates are an attempt to hit this season’s rapidly moving target – a target that is much more dynamic than usual. World cotton demand has simply caught forecasters off guard. In the coming months and beginning with the March estimates, look for significant changes involving production, exports, both U.S. and world ending stocks and, hopefully, a clearer understanding of the Indian stocks fiasco.

The market is clearly making that point.

Further, both U.S. and world carryover are expected to be as much as 2.0 million bales lower than the current USDA estimates. The world is experiencing its third consecutive drawdown in world cotton stocks. As noted in prior newsletters, both export demand and the need by textile mills to make end-of-season pricing decisions will not only support old crop prices at current levels, but also drive prices higher. Additionally, as world and U.S. ending stocks are lowered, the new crop December price will push toward the low 80s, and likely higher.

Thus, my leading comment – plant…plant…plant.

As discussed last week, export sales ready for shipment have reached a record level. Pickups appeared to improve last week, and reports are that additional improvements will come week by week. Thus, U.S. exports are now set to surpass the current USDA estimate of 14.5 million bales and will likely climb to 15.5 million bales – some one million above the current USDA estimate. Actually, it will not be surprising to see exports climb to 16 million bales. Some estimates are as much as two million bales higher than the current USDA estimate.

Also, as addressed last week, shipments will continue to remain at unusually high levels into the 2018-19 winter months and into the spring of 2019 as the demand for U.S. cotton continues to build.

Chinese demand is expected to remain strong. As the 2018 domestic auctions begin to unfold, it will be necessary for the Chinese Reserve Stocks sales to continue robust if the U.S. is to increase its sales to China. Certainly active sales to China will continue, but they could be slowed slightly if the domestic auction moves slow. Nevertheless, demand is strong.

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Video: The FCDC and AgSmart Bring Plant Breeding to a Wider Audience

In the vast prairies of Alberta, Olds College’s Field Crop Development Centre (FCDC) stands as a beacon of innovation and research in the agricultural world. The institution has become a key player in advancing agricultural technologies and practices. The FCDC’s commitment to applied research has driven them to seek effective means of disseminating their findings and creating a positive impact on the farming community.

One such avenue that aligns with their mission is AgSmart, an event dedicated to showcasing cutting-edge agricultural technologies. The coming together of the FCDC’s annual Field Day and Ag Smart has proved to be a natural fit, fostering a synergy that benefits both parties and propels the agriculture industry forward. The FCDC Field Day took part in conjunction with AgSmart for the first time this week on Aug. 1-2 in Olds, Alta. FCDC Program Director Kofi Agblor and Olds College VP of Development Todd Ormann sat down for an interview with Marc Zienkiewicz to discuss the significance of the two events taking part together and what the future holds.

The Intersection of Research and Technology The essence of the FCDC lies in its dedication to plant breeding and new seed varieties, particularly barley and triticale. While conducting research is essential, it becomes meaningful when its benefits are shared with the wider community. This is where AgSmart steps in, providing a key venue for the FCDC to showcase their research. This union between research and technology creates a holistic and enriching experience for farmers, ranchers, and industry professionals, the pair said.

Seeds as Technology For the FCDC, the partnership with AgSmart goes beyond mere event collaboration. It is about creating an environment that bridges the gap between seeds and smart technology, Ormann said. The college believes that for technology to truly revolutionize agriculture, it must begin with a strong foundation — high-quality seeds. As the saying goes, “it all starts with a seed.” To demonstrate this critical aspect, the collaboration aims to showcase the seed value chain as an integral part of the smartphone.

The Birth of a Powerful Alliance The idea of joining forces emerged when staff realized the potential synergy between AgSmart and the FCDC Field Day. With just a few days separating the two events, a proposal was put forward to merge them. The marketing and communications teams from both sides worked seamlessly to ensure the essence of both events remained intact, creating a powerful alliance that leverages the strengths of each, Agblor said.

Driving Advancements in Breeding For Agblor, the partnership with AgSmart has tremendous potential to drive advancements in breeding and other technology. With technologies like drones and imaging becoming integral to phenotyping, breeding is no longer confined to vast fields to assess thousands of plants manually. Instead, it benefits from the data-rich insights brought about by smart technologies. These advancements make breeding more efficient, precise, and instrumental in shaping the future of agriculture.

Overcoming Challenges Together While the partnership between Olds College and Ag Smart has been a resounding success, there are challenges on the horizon. Securing stable funding for long-term breeding initiatives is crucial to sustain progress. The college is committed to navigating these challenges and investing in agriculture’s future sustainably, Agblor said.