US cotton prices continued to surge above the boom days of 2010-11 after a massive crop estimate cut by the USDA, shocking Wall Street analysts and traders, due primarily to a megadrought scorching farmland of Texas, according to Bloomberg.
Futures in New York for December delivery were up 4.5% to $1.1359 a pound and up more than 21% this month.
“I don’t think you can put a top on prices right now,” Louis Barbera, the managing partner for VLM Commodities, told Bloomberg.
“I have been going to Texas for more than ten years, and this is by far the absolute worst I have ever seen, said Barbera.
What Barbera is referring to is the drought situation in Texas. The long stretches of triple-digit temperatures and limited rainfall this summer have turned vast amounts of farmland to dust, hurting cotton farmers in the South Plains of West Texas.
Last Friday, the USDA’s bigger-than-expected cut to domestic cotton crop stunned many on Wall Street. Crop output plunged to 12.57 million bales, the lowest in a decade. The cut also pushed down the US from the world’s third-largest producer to the world’s fourth.
Barbera said the western Texas region (around Lubbock and Lamesa), the epicenter of America’s cotton-growing belt, has “literally nothing” in fields that are just desert sand. He said fields that had drip irrigation were harvestable, but ones that weren’t weren’t salvageable.
How bad is the heat and drought in Texas? Outside of Amarillo, what was a cotton crop. pic.twitter.com/dp77GYUxOd
— 247AG (@247dotAg) July 22, 2022
“If cotton is not readily available from other sources, the scarcity of supply from the US could support prices globally, said Jon Devine, supply-chain economist for research Cotton Inc.
“The market has struggled to find the balance between the weakened demand environment and limited exportable supply in recent months. The conflict between these two influences makes it difficult to discern a clear direction for prices and suggests continued volatility,” Devine continued.
Supporting prices are bullish bets by money managers turning positive for the first time since June as prices rally.
Louis Rose, director at Rose Commodity Group, said the USDA’s cut to US output is “shocking” and comes at a time of the highest consumer inflation in decades.
Will they soon tell us there’s a clothing shortage and that they will have to supply all attire, and we’ll all look something like this?:
https://thenewstalkers.com/gallery/image/gallery_image/1748/1280/_v=1467863831
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Hhahahaha Bahahaahhaha knock it off lol