Commodity Trading:
Cotton Futures
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Supply / Production
Considerations
In
the United States Cotton is grown primarily south of the 36th parallel in
Texas and the irrigated valleys of California and Arizona.
Most Cotton in the United States is grown on an annual basis from
seed, as opposed to the foreign tropical producers who grow Cotton on a
perennial basis. Upland
Cotton, with staple lengths of 1 to 1 ¼ inches, is the most common form
of Cotton grown, though American Pima is gaining in popularity in recent
years due to its longer staple length of 1 ½ or more.
Pima Cotton is more commonly found in California and Arizona.
The
bulk of the Cotton crop is typically planted late April and May, though
planting in Texas has been known to start as early as March, under unusual
circumstances. Like other
crops, ideal planting conditions for Cotton is moist soil and warm
temperatures. Too much rain
can cause the fields to be too muddy to plant, while too little
precipitation or heat can cause damage to the crop while it is still a
seedling. Cotton planting is
typically completed by the end of May, though in some years this can be
dragged out through June. This
is sometimes the case in Texas, especially if Corn and/or Soybean planting
has been delayed. Normally,
during planting and early maturing, the crop is most susceptible to
damage; and, therefore, prices tend to rise based on the greatest
potential for damage. Typically in late May, seasonal highs are put in based upon
this great potential for damage.
USDA/NASS
Crop Progress Timetables
With
the completion of planting, the Cotton plant begins to grow.
When a small triangular leaf-like structure begins to appear on the
main growing stem of the plant, the Cotton crop is considered
“squaring”.
After
the crop has gone through the “squaring” process, they now begin to
flower, or set bolls. Bolls
are the blooms that eventually open into the white fluffy balls we all
recognize. During the boll setting phase of development, the Cotton plant
is almost impervious to damage, with the exception of flooding or severe
drought. Therefore, Cotton
prices tend to decline from the early stages of growth in late June
through squaring, setting bolls, to the beginning of bolls opening in late
August and early September.
The
Cotton crop is typically harvested in late September through to early
December, depending upon where and when the crop was planted.
Texas, the largest Cotton producing state, typically harvests its
crop from October 1st through December 2nd, though
in years where planting was done very early, like in the beginning of
March, Texans have been known to begin harvest as early as August.
Normally, the bulk of the Cotton crop is harvested from Early
October to mid November. Excessive
rain or snow can slow the Cotton harvest down precipitously.
Though harvest delays seldom affect yields much, delay scares have
usually been labeled as the cause of many a late September or early
October rally in Cotton. Another
problem that can occur with Cotton harvest is reserving ginning space
after the harvest. Shortages
of gin capacity in a local area often delay harvest, as Cotton farmers
prefer to have little lag time between harvest and ginning.
This tends to come at a time when domestic Cotton supplies tend to
be tight; and, therefore, can be a major contributing factor to the firmer
bias. Higher Cotton prices tend to occur from late September
through December.
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