USDA lowered 2013/14 ending stocks by 100,000 bales from its May estimate, to 2.7 million; but raised estimated 2014/15 production by 500,000 bales, to 15.0 million compared to May at 14.5 million. The production figure was right on the average pre-release trade estimate, which ranged from 14.4 million to 15.2 million.

However, the trade was expecting USDA to hike its 2014/15 export estimate by 300,000 bales, for an average trade estimate that ending stocks would rise only 100,000 bales, to 4.0 million from 3.9 million in May. But because USDA made no changes whatever to estimated usage, its estimated ending stocks rose to 4.3 million and USDA lowered its average farm price range for cotton to 60-80 cents per lb. from 63-83 in May.

Changes to USDAΆs global balance sheet for cotton were also price negative following release. USDA boosted global production and global usage by 460,000 bales from May, for no net change in stocks except for the fact USDA also raised beginning stocks by 1.1 million bales for yet another net increase of about 1.1 million bales, to 102.71 million. That equals an 11-month supply at current global rate of consumption in a market where a 3-month supply is considered an adequate buffer against any weather issues with the 2014 crop that could trim global yield.

Even if you donΆt count ChinaΆs portion of global stocks because itΆs in ΅reserveΆ, global stocks would still be a 4.5-month supply if you still count Chinese usage and nearly a 7-month supply for the ΅rest of the worldΆ counting neither Chinese usage or ending stocks in the equation.