The USDA’s forecast for August of US’s cotton supply and demand numbers are about to be revised. The August projection of 15.9 million bales of cotton was an important first benchmark of actual production since it was the season’s first estimate based on field sampling of squares and bolls. But its projections for September serve as either a confirmation of or contradiction to what it had measured in August. This sort of projection can sometimes lead to market surprises when there are fewer remaining harvestable bolls in September compared to the potential from a month before.

The growing season in the Southwest is winding up in strange fashion. After a very hot and dry July, August was unusually wet. The August rains have probably added some pounds of yield to later-maturing fields in West Texas, particularly irrigated fields, and also, thankfully, reduced some expenses that would have been incurred in with August irrigations.

But, much of the dry land acreage in West Texas was probably too far along to benefit from the August rains, so their effect may be negligible. It is a different story in Central and Southeast Texas where continually moist conditions on mature cotton have likely lowered color grades and caused widespread sprouting of cottonseed in the boll. The impact of this could hurt growers through discounted loan values, higher ginning costs, and little cottonseed value to offset those costs.

The level of bales produced by the weird August weather may be the same, or even a little higher. While causing quality problems, my understanding is that the Central and Southeast Texas crop will still have to be harvested and ginned. So there may not be any downward adjustment in aggregate production. In addition, there may be a marginal increase in yields from west Texas and, so also production from later-maturing irrigated land.