USDA’s July 12 supply and demand report will be the first attempt at an objective look at the extent of abandonment in Texas, Cleveland says.

“I’m thinking there will probably be 2 million to 2.5 million acres abandoned and that Texas yield will be less than 1 bale per acre.”

As an example of the gravity of the drought there, Cleveland cites Dawson County, Texas.

“They’re about two counties south of Lubbock, the center of the largest cotton-producing region in the world. Dawson production is basically dryland, and they’ve had some tremendous yields in the past.

“In 1973, they had what at the time was a record crop, 338,000 bales. In 1974, they had a drought very similar to the one now in progress and they harvested only 32,000 bales. They lost right at 90 percent of their crop — and that’s the kind of situation they’ve looking at this year.”

If U.S production falls to 16 million bales, exports could drop to 12 million bales, Cleveland says, “or I could see us going below 11 million. If we produce only 16 million bales, and we export more than 11.5 or 12 million, we’re going to be down to a carryover of about 1.5 to 2 million.”

However, he says, world production is expected to be up 10 million bales, and consumption up 4 million bales, leaving a gap of 6 million bales.

“I know the Australian crop has come on strong lately, and India’s crop is getting good rains. The Texas crop still has a long way to go — but I don’t think their crop will get bigger even if they get rains; I think it can only get smaller.

So, stocks are still going to be somewhat low, and we’ve still got to pay a lot attention to the Chinese economy. They’ve raised their interest rates 10 or 11 times in the last 15 months. Their economy is still growing at 6 percent to 8 percent annually. Inflation is a problem, and they’re trying to slow it.”

The value of the U.S. dollar, which Cleveland says, “most analysts suggest is still in trouble, will certainly have an impact on cotton prices. As the value of the dollar goes higher, the price of cotton will go lower. If the reverse happens and the dollar goes down, cotton prices will get good support.”