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World cotton stocks will fall further than had been thought, thanks to production setbacks in the likes of Turkey and the US, US farm officials said, although the revision was not sufficient to keep cotton prices at a three-month high.
The US Department of Agriculture, in its flagship Wasde crop report, cut by 1.7m bales to 104.4m bales its forecast for world cotton inventories at the close of 2015-16.
The downgrade reflected cuts to production prospects for countries including the US, where the USDA noted lower prospects for output in North and South Carolina, Turkmenistan and Turkey, besides in Pakistan, where pests and disease appear to have caused "significantly lower yields".
"The major factor contributing to the low productivity is the unprecedented infestation of white fly and cotton leaf curl virus, resulting in significant crop damage," the USDA said, noting that low cotton prices had led to "inadequate pest chemical control practices" as farmers curbed output costs.
"In recent years farmers have faced increased prices of agricultural chemicals and relatively lower cotton prices."
'Overbought'
Cotton consumption estimates for 2015-16 were raised for some countries too, including Vietnam, which USDA staff said in a report overnight was now expected to join Bangladesh and China as the only countries importing more than 5.0m bales of the fibre.
However, the revisions were insufficient to prevent New York cotton futures for March - which had hit 65.23 cents a pound earlier, the highest for a spot contract since late August – easing back after the report.
The contract stood at 64.57 cents a pound in late deals, a gain of 0.1% on the day.
The Wasde data were termed "supportive" to prices by Louis Rose at the Rose Report.
However, with the March contract having gained more than 5% since November 23, "the market had become overbought", Mr Rose said. World cotton stocks at 104.4m bales are still large by historical standards, and behind only the 112.0m bales estimated at the close of last season.
US revisions
The USDA cut its estimate for US stocks at the close of 2015-16, in July next year, by 100,000 bales to 3.0m bales.
The downgraded reflected a cut of 250,000 bales in the estimate for domestic production, in part offset by a 200,000-bale downgrade to the forecast for exports, following "lagging sales to date".
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Cotton prices pare gains, despite cut to world stocks estimate
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