NCC: Fundamentals Encouraging for 2010/11
August 30, 2010 The National Cotton Council’s Gary Adams provided an in depth look at the coming year last week at the NCC Mid Year Board of Directors Meeting in Memphis, TN, saying conditions were “encouraging” heading into the 2010/11 season.
Speaking to a packed audience at the Peabody Hotel, Adams said growers should benefit from another year of strong fundamentals in the 2010/11 season.
“We came out of last year with 47.5 million bales of stock in 2009. That became the beginning stock number for the 2010 marketing year,” said Adams. “That sounds like a lot of cotton, but it’s down from where it was in the previous five marketing years when we were close to 60 million bales.”
Adams said the majority of the remaining stocks will be used to satisfy domestic mill-use until the bulk of the new crop enters the pipeline. That time frame is generally around three and a half months, he said.
“Three and a half months of mill use on a global basis is running somewhere around 35 million bales. So you figure that’s really dedicated to keeping the textile industry going until we have the new crop in the pipeline. The amount that leaves us with is roughly 12 million bales, again down sharply from where we’ve been carrying over 25 million, 26 million to 27 million bales,” Adams said.
“I think it certainly underscores that the market is being much more sensitive to how this crop develops, not only in areas such as Texas, but also in places such as Pakistan, India and China.”
Because abandonment is projected to be abnormally low this season, Adams says the U.S. could produce as much as 18.5 million bales of cotton – nearly 6 million more bales than last year. Still, strong demand should create another favorable year of fundamentals in 2010/11.
“I predict the stock picture a year from now will look very similar to where it is right now,” said Adams.
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