REUTERS: Cotton jumps after USDA trims US output, ending stocks outlook
REUTERS: Cotton jumps after USDA trims US output, ending stocks outlook

REUTERS: Cotton jumps after USDA trims US output, ending stocks outlook

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May 12 (Reuters) -ICE cotton futures jumped nearly 2% on Friday after the U.S. Department of Agriculture (USDA) lowered its estimates for U.S. production and ending stocks in 2022/23 crop year in its monthly supply and demand report.

The most active first-month July cotton contract CTc1 rose 1.03 cent, or 1.3%, to 80.65 cents per lb by 1:10 p.m. EDT (1710 GMT) after climbing as much as 2.7% to 81.76 cents earlier.

"The carry out is way too tight so the market has some work to do. It's got to produce a good US crop, in order to keep prices under 90 cents," said Rogers Varner, president of Varner Brokerage, in Cleveland.

The USDA in its May World Agricultural Supply and Demand Estimates (WASDE) report lowered projected U.S. production in 2022/23 by 212,000 bales to 14.5 million bales and lowered ending stocks estimates by 600,000 bales to 3.5 million bales.

Meanwhile, the USDA raised U.S. exports forecast by 400,000 bales citing a stronger pace of shipments.

"The market certainly got a jolt to the upside - whether it holds it or not remains to be seen," said Keith Brown, principal at cotton broker Keith Brown and Co in Georgia.

The May WASDE report also showed U.S. production higher by 1 million bales in 2023/24 from the prior year.

However, the contract was down about 1.8% for the week so far, as the dollar looked set for its best week since September, making cotton more expensive for overseas buyers. USD/

"The chance of rainfall in west Texas is limiting any gains and putting pressure on the market," said Jim Nunn, owner of Tennessee-based cotton brokerage Nunn Cotton.

Australia's Minister for Trade and Tourism Don Farrell said he was "pleased" with his talks with his Chinese counterpart in Beijing on removing trade barriers.

Reporting by Deep Vakil in Bengaluru; Editing by Shailesh Kuber and Krishna Chandra Eluri


Source: Reuters

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