USDA’s scheduled release of their October cotton production estimate was too soon after Hurricane Michael to account for the likely massive damage. As a result, most analysts, and the futures market itself appeared to discount the October numbers. USDA’s World Agricultural Supply and Demand Estimates (WASDE) report for November was thus set up as a fulfillment of expectations from a month ago.
Accordingly, the November WASDE showed a major month-over-month reduction of 1.35 million bales, mostly from the southeastern U.S. This cut resulted from 5 percent less yield from 2 percent fewer harvested acres. U.S. exports were lowered by a half million bales, and domestic mill use was cut 100,000 bales. The bottom line of these adjustments was a 700,000 bale reduction in U.S. ending stocks, compared to the previous month. While certainly bullish looking, the muted market reaction may reflect that a big production cut was already priced in.Source: Southwest Farmpress