Cotton futures hit a nine-month high as Tropical Storm Colin spilled rains of up to 10 inches on parts of the south eastern US, worsening prospects for a crop already hit by persistent rainfall which has slowed wheat harvesting too.
New York cotton futures for July touched 65.99 cents a pound in early deals on Tuesday, the highest for a spot contract since August last year, and taking gains so far this week above 3%.
The headway came as Tropical Storm Colin, having brought winds of more than 50mph and inundations to parts of Florida, headed up the eastern US coast, bringing heavy rains to the North and South Carolina.
“Forecasters say there is risk of flooding in southern Georgia and the Carolinas,” said Tobin Gorey at Commonwealth Bank of Australia, adding that “there is some concern about the impact” the storm may have on crops in the South East US.
At the Rose Report, Louis Rose said that “across the southeastern states, Tropical Storm Colin is expected to dump rain across the Gulf Coast and Lower Atlantic Coast regions.
“And, although portions of Alabama, Georgia and Florida are too dry, a tropical storm is not the preferred way in which to end a droughty period.”
‘Wash away crops…’
The US cotton crop has already made a somewhat moderate start to the growing season, in condition terms, with the US Department of Agriculture, in its first rating of 2016, pegging the crop at 47% “good” or “excellent”.
That represents a fall of 3 points year on year, and compares with readings above 50% early in 2012, although the current crop is faring better than its 2013 counterpart, which had a first reading of 42%.
This year’s rating was held back in particular by findings for Texas, the top US cotton-producing state, where 37% of the crop was rated in good or excellent health, hurt by rains which last week hit 10 inches in parts of the state.
“Flooding continued to wash away crops… in areas of the Northern Low Plains and the Cross Timbers,” USDA scouts said.
‘Planting was delayed’
The heavy rains have delayed sowings too, which are 65% complete in Texas, are 13 points behind the typical pace.
“Cotton planting was delayed in areas of the Low Plains due to wet conditions,” USDA scouts in Texas said.
Nationwide, US farmers have seeded 75% of their cotton crop, a decline of 9 points year on year, with Kansas growers too notably behind in sowings – with 34% completed, half the proportion typically chalked up at this time of year.
Slow start to wheat harvest
The wet southern Plains weather is being reflected in a slow pace of winter wheat harvest too, with just 2% completed as of Sunday, compared with an average of 10% by then, and a little below the figure that investors had expected, the USDA data showed.
In Oklahoma – where farmers had got 5% of their winter wheat in the barn, compared with a typical 31% – “heavy rain fell over most of the state”, official scouts said.
The slow harvest, amid wet weather, has raised concerns for the quality of the crop, with moisture encouraging sprouting in ripe kernels, potentially rendering them unfit for food use.
Futures in hard red winter wheat, the class grown in the southern Plains, made a strong start to Tuesday, before easing back on profit-taking.
Cotton futures lost gains too, shedding 0.3% to stand at 65.34 cents a pound, as selling set into soft commodities, and in particular into sugar futures, which for July stood down 2.2% at 18.36 cents a pound.