Supply Up, Average Prices Up
February 14, 2012 In its October report, USDA projected the 2011/12 U.S. crop to reach 16.61 million bales, up 50,000 bales from the September report.
U.S. mill use was unchanged from the previous month at 3.80 million bales while exports were lowered 500,000 bales to 11.50 million bales due to lower foreign import demand. This generates a total 2011/12 offtake of 15.30 million bales. Ending stocks for 2011/12 are projected at 3.90 million bales for an ending stocks-to-use ratio of 25.5%.
For the 2010/11 crop year, USDA gauged U.S. cotton production at 18.10 million bales.
Estimated mill use and exports were unchanged from the September report at 3.90 million bales and 14.38 million bales, respectively. Total offtake for the 2010/11 crop year is estimated at 18.28 million bales. Ending stocks were estimated at 2.60 million bales. The estimated stocks-to-use ratio for the 2010-11 marketing year is 14.2%. loan stocks following a decrease of 19,612 bales to 213,97 bales.
The August 2011 Upland cotton farm price was 94.00 cents per pound, according to USDA. That would be an increase of 13.90 cents per pound from July. In comparison, the August 2010 Upland cotton farm price was 77.20 cents per pound.
Marketings for the month were 506,000 running bales, bringing the 2011 calendar year total to 5.76 million.
Forward Contracting
USDA estimates that 37% of U.S. Upland cotton acreage was forward contracted as of October 1, down 1% from the September level.
Mid-South growers have forward contracted 63% of their 2011/12 crop, up from 14% the previous year. All states in the region show an increase in contracting activity when compared to the same time last year.
In the Southeast, 30% of the Upland crop has been booked as of October 1, higher than in 2010. Growers in the Southwest have forward contracted 63% of their 2011/12 crop as of October 1, up from 14% the same time last year. As of October 1, the West has contracted 3% of their 2011 crop. But USDA notes that forward contracting estimates do not include cooperative activity or cotton consigned to marketing pools.
Foreign Supply & Demand
Again in USDA’s October report the projected 2011/12 world production estimate was raised 1.23 million bales from the September report to 124.19 million.
World mill use was lowered 840,000 bales from the September report to a projected 114.38 million bales. Consequently, world ending stocks for 2011/12 are projected to be 54.83 million bales for a stocks-to-use ratio of 47.9%.
Since the week ending September 22, the latest reporting period, the average of the five lowest Far East forward quotes decreased 5.81 cents per pound to 111.46 cents per pound.
The low U.S. forward quote for the Far East decreased 6.95 cents per pound over the same period, taking a value of 117.50 cents for the week ending October 6.
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