NEW YORK, Jun 08, 2010 (Dow Jones Commodities News via Comtex) -- Favorable planting and growing conditions for the 2010-11 U.S. cotton crop will prompt the U.S. Department of Agriculture to raise its production outlook.
Analysts surveyed by Dow Jones Newswires on average also expect the USDA will trim its outlook for cotton exports in the 2010-11 season, which officially begins Aug. 1.
The USDA will release updated forecasts for the U.S. and world cotton crops in the current 2009-10 season, as well as next year, at 8:30 a.m. EDT Thursday.
Little change is expected for the current season as it draws to a close.
Ideal weather conditions will prompt the USDA to lift its expectation for the 2010-11 U.S. cotton crop to 16.90 million bales from the 16.70 million 480-pound bales projected in May, analysts said.
Mild weather to this point in the planting season has complimented seeding throughout most of the Southern U.S. as crops benefit from moisture reserves accumulated over the notably wet winter.
The USDA rated the developing crop 66% in good-to-excellent condition in the week ended June 6. "Everything is going well in Texas, there's very little replanting," said Peter Egli, director of risk management at Plexus Cotton Ltd. in Phoenix. Egli's 2010-11 U.S. cotton production estimate of 17.20 million bales was among the highest of analysts surveyed.
Texas is the leading state for cotton production, with more than half of the nation's total 10.5 million acres to be planted there, USDA data show.
The USDA may lower its outlook for cotton exports in the same season, however, if the U.S.'s major competitor, India, harvests a bumper crop. On average, analysts projected the USDA would pare 2010-11 U.S. cotton exports to 13.41 million bales, down from the 13.50 million anticipated in May.
A strong crop from India will prompt their government to export in larger volume, taking some market from U.S. merchants, said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta.
India, the world's No. 2 cotton producer and exporter, competes with the U.S. for the cotton import market of China, the world's top producer, importer and textile producer. India imposed a ban on cotton exports April 19 after textile mills blamed high volumes of scale shipments for a sharp domestic price increase and a fall in local availability. The government relaxed the ban on May 21 and permitted shipments with approval from the trade ministry. India's cotton seedings usually begin with the onset of the annual monsoon. The monsoon has stalled, but is likely to revive in the next four to five days after a cyclone interrupted its usual progression, according to the country's weather office.
Analysts estimated 2010-11 U.S. domestic cotton mill consumption at 3.31 million bales, up just slightly from the 3.30 million bales that the USDA projected last month. The U.S. imports most of its textiles and exports most of the raw fiber to Asia, where the bulk of the world's yarn and textile mills are based.
Analysts also anticipated the USDA would slightly increase U.S. ending stocks of cotton to 3.21 million bales in the 2010-11 season as a result of other changes in the crop production outlook.
