Cottonseed prices came off last week as Gavilon decided to put out lower offers. I have talked to many gins in each origin (TX, OK, AR, MO, MS, TN and GA) and have concluded there has been zero gin selling. We have a USDA production report this Wednesday and I expect the production number to be between 17.0 – 17.5 million bales, verses 19.9 mb last year. This would include a 300,000 bale loss in South Texas from Hurricane Hanna. So, somewhere between 2.4 – 2.9 mb less than last year which extrapolates to 725,000 – 875,000 tons of cottonseed less than last year. This is why the ginners are not willing to sell at the moment and most likely won’t for another 45 days.
It’s compelling to look at selling these lower value when you look at dairy demand, milk prices, COVID-19 issues, and competing commodity values, but not when you look at the fundamentals of a much smaller crop, current prices at origin, and ginner mentality.
I have reduced my offers to be competitive with the current destination market. There is virtually no liquidity at the origin so I don’t think many tons are going to get traded right now. I’ll keep you updated as things change on a day-to-day basis.
Please call to discuss further.