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Cotton Marketing News: Prices Continue to Flounder in New, Lower Range

Cotton Marketing News: Prices Continue to Flounder in New, Lower Range

Don Shurley, Cotton Economist, UGA Emeritus Professor

This week’s USDA crop production and supply and demand estimates for July did little to correct the direction in prices.  The report was actually not bad, but prices continue to show no improvement.  The following are highlights from the report:

  • The 2017 projected US crop was lowered 200,000 bales to 19.0 million bales. This was based on the new June 30 Acreage report of estimated acres actually planted. Abandonment remains at 7%; the US average yield was increased from 810 to 816 lbs per acre.   Next month’s report will be the first for the 2017 crop to have survey-based estimates for yield and acres to be harvested.
  • Compared to last month’s estimates, World production for 2017 was raised 630,000 bales. This would be almost 9 million bales more than last year.
  • India production was raised from 28 to 29 million bales. This would be 2 million bales more than last year. India is a major exporter when they have supplies to do so.  Exports for the 2017 crop year are projected at 4.2 million bales compared to 4.3 last year—despite higher carry-in and higher production.  India’s own mill use is expected to be up compared to last year but ending stocks would grow by almost 1 ½ million bales.  Keep an eye on India—what happens there will impact prices.
  • Projected World use/demand for the 2017 crop year was increased roughly ½ million bales to just over 117 million bales. This is the second consecutive increase in the projection since the first estimate back in May and, if realized, would be 2.9% growth from last year.
  • Projected imports by China for the 2017 crop year remain at 5 million bales—the same as the 2016 crop year. Imports for Pakistan, Thailand, and Mexico were raised from the June estimate; Vietnam was revised down from the June number.
  • No changes to the China numbers from the June estimates.

In this week’s report, USDA changed the projected price range for the 2017 crop from 54 to 74 cents to 54 to 68 cents.  This could be interpreted to mean that downside price risk is now viewed the same but upside potential is lessened.

Prices (Dec futures) now seem likely to move in a range of mostly 66 to 69, maybe 70 cents.  Export sales have slowed; shipments for the 7-day period ending July 6th were 208,800 bales compared to 315,800 for the prior period.  Shipments now total 13.81 million bales with 3 weeks remaining to reach the USDA projection of 14.5 million bales.

Crop conditions for the week ending July 9th showed that 51% of the Texas crop is rated good to excellent compared to 41% a week earlier.

This market will likely move on US crop conditions and the quantity and availability of export supplies here and abroad.

 

 

 

 

 

PG

Author: admin – webmaster@ifas.ufl.edu

admin

Permanent link to this article: http://okaloosa.ifas.ufl.edu/newsletters/2017/07/14/cotton-marketing-news-prices-continue-to-flounder-in-new-lower-range/