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marketeye
Veteran Advisor

What about cotton?

Here's the commentary on cotton, following Thursday's USDA Supply/Demand Report.


This analyst says, "US balance sheet left as is although average farm price narrowed to 80-83 cents. On the world front, beginning stocks are down 200K in India due to a smaller crop in 2009/10. India’s 2010/11 crop cut by 1 mln bales to 25 mln with China also cut 500K to 29.5 mln. Australia and Brazil’s cotton crops enjoyed a combined increase of 1.1 mln so a net loss of 300K to global production. Usage left unchanged at 116.6 mln bales but imports upped 500K in China whereas Australia and Brazil will enjoy larger exports. World carryout as of Jul 31, 2011 is down 480K bales to 42.33 mln bales. India took the blunt of the drop with a loss of 1.2 mln but increases were made to Australia and Brazil.

 

BOTTOMLINE RE PRICES: US futures were listless after the release of the numbers but perked up a bit by 9:00 AM EST. Nearby weekly prices are up about 14 cents since the Feb 9th report so the cut in Indian and Chinese production were already in the market. Other commodities and stocks took a hit overnight due to worries re: potential for a long drawn-out situation with Libya and its impact on oil and economic growth longer term. New crop prices are increasingly trading on their own merits and seem to be reflecting a strong NASS Planting Intentions figure due out March 31."

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4 Replies
Jed Stivers
Senior Contributor

Re: What about cotton?

Thanks for the cotton update.
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marketeye
Veteran Advisor

Re: What about cotton?

Anything for you, Jed.

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Jim Meade / Iowa City
Senior Advisor

Re: What about cotton?

ISU Chad Hart said that in fringe areas, farmers are considering corn, soybeans, wheat, rice and cotton.  He said that in the irrigated areas, cotton pays enough better that it will be the corp of choice.  In dry cotton areas, it may have to fight with soybeans for acres but is still attractive if the farmer already has the machinery and there is a gin nearby.  To, it sound like many will be attracted to growing cotton if this analysis is correct.  Mike - could you fish around and see if there is anything to this line of reasoning?

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marketeye
Veteran Advisor

Re: What about cotton?

More cotton thoughts from this analyst overnight:


"It was a black rock kind of day, Thursday, for US stocks and those in Asia are not faring any better this evening.  US commodities are mixed with cotton down more than not after its first hour of trade.  The May cotton contract is off just over 11 cents from its close last Fri, Mar 4 on a weekly basis so closing lower will add to the negative tone next week.  Today’s on-call report did show some pricing the past week in the May and Jul contracts, 1,135, reducing the total to 57,073 contracts or 5.71 mln bales."

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