The U.S. Department of Agriculture surprised cotton traders and analysts by cutting its estimate of U.S. production by almost one million bales, sending the market on a roller coaster ride when the monthly report was released Thursday morning. The U.S. crop is now pegged at 16.54 million bales compared to 17.50 million estimated last month due to reductions in planted and harvested acres and yields. The department also reduced its estimate of U.S. exports to 10.00 million bales, down from 10.70 million last month, and U.S. ending stocks now are projected at 5.20 million bales compared to 5.60 million estimated in August.
Texas production is now estimated at 6.60 million bales, down 500,000 bales from the August estimate but well above 2013 production of 4.17 million. The High Plains is expected to harvest almost 3.87 million bales, and Rolling Plains production is estimated at 890,000 bales. The Oklahoma crop is pegged at 320,000 bales, down 55,000 bales from last month’s estimate, and Kansas producers are expected to harvest 48,000 bales, 12,000 fewer than was estimated in August.
On its world balance sheet, USDA raised its estimate of world production to 118.01 million bales, up 370,000 bales from a month ago. World consumption was lowered 480,000 bales to 112.12 million, and estimated ending stocks increased 1.21 million bales to 106.29 million. The department did not change its estimates for Chinese production, imports or domestic consumption; however it raised its estimate of beginning stocks to 61.96 million bales, up 550,000 from last month’s report.
Thursday’s session at the Intercontinental Exchange (ICE) began on a weak note following the release of USDA’s weekly export sales and shipment report. The report showed a net reduction of 34,200 upland bales in U.S. export sales in the week ended Sept. 4 following cancellations totaling 107,400 bales of which 105,900 were attributed to China. Shipments for the week totaled 83,600 bales, down 20 percent from the previous week and 17 percent from the prior four-week average. The primary destinations were China, Mexico and Turkey.
Cotton futures prices at ICE slipped following the disappointing export report with December trading as low at 66.33 cents, down 81 points from Wednesday’s close. The light trading activity and early losses changed quickly after the supply and demand reports were released at 11:00 a.m. CDT. December cotton soon moved to a high of 68.18 cents per pound and held in the upper half of its range before settling at 68.09 cents, up 95 points. All other contracts also posted modest gains by the end of the session.
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