I'm higher than the trade estimates in cotton

I'm outside the trade range for cotton, with predictions ranging from 17.0 to 17.9 million bales. If we take the best guess, the corrected model estimate, I'm at 18.3 million bales. In talking to some folks in the know, I'd guess I'm at least on the right side of that range. I may be high, but 17 million bales seems low to me at this point.
It is worth noting that I'm comparing my current corrected estimate to the USDA's report tomorrow, but the corrected model also includes some average decline in conditions. The problem is for cotton, that there is often not an 'average' decline, it can be bimodal in nature. Anyone want to comment anonymously about thier own thoughts on tomorrow's USDA report for cotton production?

Biodiesel RIN markets

I've been spending some time with RIN markets over the last year. I've argued that what is keeping biodiesel production down in the first half of the year was in part the uncertainty surrounding the credit, not necessary if the credit was in place or not. In biodiesel, the mandate appears to be fairly binding, and therefore determining quantities for the year. Blenders, however, may be taking a wait and see approach with respect to biodiesel blending, not wanting to blend now, with a higher RIN price embedded in the fuel purchase price only to see congress pass (and retroactively) a credit extension. RIN prices have increased substantially as the probability of an extension fades.

I also have some questions as to why we don't see a greater 2009 to 2010 vintage ethanol RIN wedge, but as we approach a discretionary blending volume near 20% of next years mandate, low and roughly equivalent values between the two vintages of ethanol RINs probably makes sense.

Week 14 WITH a June 30 acreage update

Now with acreage change!

I think it is a bit early to speak definitively about any of the results of the condition model. I haven't gone over state by state results in great detail to see if my re-estimated equations (without redoing the uncorrected/corrected model wedge) is having much of an effect on the results this year but I will say that the 'excessive' moisture in the mid-west seems to be reducing conditions (and model yields) in Iowa. With smaller declines across the northern corn belt. Pennsylvania seems to have had a significant decline this week but I've no information as to why.

Alternatively the rains last week in Texas seem to have boosted the estimate of cotton production by 200,000 bales up to 8.2 million bales in the uncorrected model.

I'll try to add a bit more commentary in the coming weeks, I've been spending my time looking at biofuel RIN markets and preparing for the mid-year baseline run for FAPRI.

Week 14 spreadsheet with acreage change

Update with new acre numbers.

Week14 (NO ACREGE ADJUSTMENT)

I'm using the same acreage with no adjustment from last weeks report.


I think it is a bit early to speak definitively about any of the results of the condition model. I haven't gone over state by state results in great detail to see if my re-estimated equations (without redoing the uncorrected/corrected model wedge) is having much of an effect on the results this year but I will say that the 'excessive' moisture in the mid-west seems to be reducing conditions (and model yields) in Iowa. With smaller declines across the northern corn belt. Pennsylvania seems to have had a significant decline this week but I've no information as to why.

Alternatively the rains last week in Texas seem to have boosted the estimate of cotton production by 200,000 bales up to 8.2 million bales in the uncorrected model.

I'll try to add a bit more commentary in the coming weeks, I've been spending my time looking at biofuel RIN markets and preparing for the mid-year baseline run for FAPRI.

Week 14 spreadsheet

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Week 13

Week 13 Spreadsheet

Week 12

I'm running at about 17.7 million bales of cotton production, 8 million of it coming from Texas. In discussion with some folks much more knowledgeable than I that 8 million doesn't seem to bad and might even be a bit low. I think the issue is that the model predicts an 'average' abandonment rate and this tends to be something around 10%. The problem is the 'average' never occurs, it is either 4% or 40% abandonment in Texas but seems to be rarely 'average'.

Just to refresh your memory the uncorrected model shows the yield if we FINISH the year with current conditions. The corrected model tries to adjust for the normal decline in conditions that occurs throughout the growing season and thus represents the best guess for the final yield. I did not adjust the correction values but will probably do so over the next couple of weeks to include the 2009 data which I have done everywhere else.

Week 12 Spreadsheet (3mb)