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Texas Agriculture Archive

February 21, 2003

MARKETING
 

By Bryce Myrick
Director, TFB Agricultural Marketing Education

When will a rise in commodity prices not be beneficial to farmers? If any increase in price results in a decrease of a counter-cyclical payment, farmers may not benefit from higher commodity prices.

This is a scenario that may be developing in the cotton market. Two factors that are very clear are; we have a dollar that is 20% below last year's high and December cotton futures and options are trading at a high premium. With a "livable" number of planted domestic and foreign acres, prices should be determined by weather and demand. In order to have a strong domestic demand, we need a favorable economy.

Although it appears cotton has a chance to increase in price, now is probably not the time to buy December futures and options to protect a counter-cyclical payment. December cotton is 59 cents and all December calls are extremely high. This looks like a trap and my suggestion is WAIT.

To set up workshops or for help with your hedging needs, call 254-751-2242 or 915-698-0355 or e-mail: bbmyrick@swconnect.com.

August - Live Cattle

Fundamentals: $14 discount to current cash. Technical Analysis: Trend–Sideways/Resistance–69.27/Support–67.47

July - K C Wheat

Fundamentals: Ukraine lost a big percent of their potential wheat crop. Technical Analysis: Trend–Down/Resistance–3.46/Support–3.25

May - Cotton

Fundamentals: Lower dollar could strengthen cotton sales.
Technical Analysis: Trend Up/Resistance–56.30/Support–54.20

December - Cotton

Fundamentals: Planted acreage numbers will have a near term effect.
Technical Analysis: Trend–Up/ Resistance–59.80/Support–57.70