Cotton Finds Buyers After Sell-Off
Cotton Finds Buyers After Sell-Off

Cotton Finds Buyers After Sell-Off

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By Julie Wernau  Features Dow Jones Newswires

The cotton market bounced higher Friday following Thursday's limit-down move based on unexpectedly high government estimates for production.

Cotton for December was up 0.6% to 68.53 cents a pound on the ICE Futures U.S. exchange.

A monthly estimate of world supply and demand for cotton took traders by surprise Thursday. The U.S. Department of Agriculture said its first survey of U.S. crop production indicated a 20.5 million-bale crop, the largest in 11 years. The production far outweighed the 18.83 million bales expected by analysts surveyed by The Wall Street Journal, a slight drop from last month's 19 million-bale estimate.

The report was the first in which the USDA used objective on-the-ground estimates to determine yields for developing cotton and some traders bought futures Friday, wary of the initial estimates.

"It could be that USDA is overestimated yield on this report and that production estimates are the highest for the year," said Jack Scoville, vice president of Price Futures Group in Chicago.

Plexus Cotton said in a note that although the U.S. crop has been doing well recently, "it is a rather bold call to plug in record yields at this point in the season."

The USDA's estimate that U.S. cotton will produce yields at 892 pounds per acre with 8.3% abandonment would match record yields from 2012 when 24% of the crop was abandonment, the firm said.

In other markets, raw sugar for October lost 0.5% to 13.16 cents a pound, cocoa for December was up 0.9% at $1,984 a ton, arabica coffee for September rose 0.6% to $1.3935 a pound and frozen concentrated orange juice for September was off 0.1% at $1.3545 a pound.

Source: http://www.foxbusiness.com/features/2017/08/11/cotton-finds-buyers-after-sell-off.html

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