By Carolyn Cui
Cotton extended its rally Tuesday as the U.S. government painted a slightly more bullish outlook for the fiber market.
In its monthly supply and demand update, the U.S. Department of Agriculture said that cotton production will be reduced to 12.87 million bales from 12.94 million estimated in March. The government agency also expected 9.5 million bales to be exported and the ending stocks to be stand lower at 3.5 million bales. The report was largely in line with the forecasts by the analysts surveyed by the Wall Street Journal.
Fundamentals for cotton have turned supportive for prices of late, fueled by "the surprisingly strong reading on the U.S. export sales, a modest setback in Chinese cotton production and drawdown in ending stocks," The Hightower Report in Chicago said.
Hightower said in the report that also "supportive to the market was a boost in risk-taking sentiment, with a new nine-month low in the U.S. dollar and gains in crude oil."
Cotton producers are beginning to plant cotton. So far about 5% of expected U.S. acreage is planted, up from last week's 3%, according to the U.S. Department of Agriculture. The 10-year average for this time of year is 7%, with the highest percentage completion at 13% in 1988 and the lowest in 2015 at 4%, according to Hightower.
Separately, the USDA also said in Tuesday's report that the decimated Florida orange crop is improving. In its latest forecast, the agency boosted its estimates of this year's crop by 7% from last month to 76 million boxes. However, the crop is still down 22% from last season and is the smallest since the 1963-1964 season.
Complicating the picture is that those oranges are producing less juice: 1.42 gallons per box, down 5% from last season and a 2% drop from last month's forecast. Florida citrus groves have struggled with a disease called citrus greening that is causing fruit to drop before it is ripe.
Frozen concentrated orange juice futures were down 0.8% to settle at $1.3595 a pound.
In other markets, raw-sugar futures fell 0.6% to 14.07 cents a pound, cocoa for July was up 1.1% to $2,963 a ton, and arabica coffee for May rose 1% to $1.2460 a pound.
