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Higher Production May Keep Cotton Prices Restrained

Summary:
In the most recent WASDE report, the USDA increased its estimate of 2016/17 US cotton production to 16.16 million bales, up from its October estimate of 16.03 million bales. US ending stocks are estimated at 4.5 million bales, up from the October estimate of 4.3 million bales. A larger than expected crop in Texas, the largest cotton growing state in the US, is being partially offset by decreases in the Southeast, where hurricanes had damaged some crops. The forecast range for the average price received by producers was increased from 59.00–69.00 cents per pound in October to 63.00–71.00 cents in November. World 2016/17 estimates are also showing larger production and ending stocks, mainly due to a 500,000 bale increase in India’s crop. World production is now estimated at 103.3 million bales, up from 102.7 million bales in October. World ending stocks are now projected at 88.3 million bales, up from the October estimate of 87.4 million bales. World consumption remained unchanged at approximately 112 million bales. The USDA’s weekly cotton export sales report released today showed current marketing year sales up 5% from the previous week at 168,800 running bales. However, this represents a 21% decrease from the prior four week average. ICE cotton futures were up during Thursday’s trading session with the most heavily traded December contract gaining 0.91 cent (1.

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In the most recent WASDE report, the USDA increased its estimate of 2016/17 US cotton production to 16.16 million bales, up from its October estimate of 16.03 million bales. US ending stocks are estimated at 4.5 million bales, up from the October estimate of 4.3 million bales.

A larger than expected crop in Texas, the largest cotton growing state in the US, is being partially offset by decreases in the Southeast, where hurricanes had damaged some crops. The forecast range for the average price received by producers was increased from 59.00–69.00 cents per pound in October to 63.00–71.00 cents in November.

World 2016/17 estimates are also showing larger production and ending stocks, mainly due to a 500,000 bale increase in India’s crop. World production is now estimated at 103.3 million bales, up from 102.7 million bales in October. World ending stocks are now projected at 88.3 million bales, up from the October estimate of 87.4 million bales. World consumption remained unchanged at approximately 112 million bales.

The USDA’s weekly cotton export sales report released today showed current marketing year sales up 5% from the previous week at 168,800 running bales. However, this represents a 21% decrease from the prior four week average.

ICE cotton futures were up during Thursday’s trading session with the most heavily traded December contract gaining 0.91 cent (1.3%) to settle at 69.20 cents per pound, while the March 2017 contract gained 0.97 cent (1.4%) to settle at 69.83 cents per pound.

As of 14:32 GMT on November 9, the Cotlook ‘A’ Index stood at 77.75 cents, a gain of 0.25 cents from the previous day.


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Brent Lantzy
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