Prior to release of todayΆs September crop report, trade estimates of U.S. production averaged 17.26 million bales in a range from 17.1 million bales to 17.4 million; down modestly from USDAΆs August estimate of 17.5 million. But USDA not only reduced beginning stocks by 150,000 bales, it cut both acres to be harvested and average yields to produce a new production estimate of 16.54 million, down 960,000 bales from August. So the supply adjustments were quite price friendly.

These were mitigated, however, by an unexpected reduction of 700,000 bales in estimated exports. Therefore, ending stocks declined by by just 400,000 from August, to 5.2 million, at the low end but within the range of pre-report trade estimates of ending stocks and enough to generate gains in cotton futures.

Globally, estimated ending stocks rose again, but only slightly, to 106.29 million bales from last monthΆs 105.08 million, or just over 1%. ItΆs still huge at an 11.5-month supply, but not much more than last month at an 11.3-month supply. It was the continued increase in global ending stocks, notwithstanding the drop in U.S. ending stocks, which led USDA to revise its forecast range for average U.S. farm price down slightly at the upper end, to a range of 58-70 vs 58-72 in August.

We looked back at the history of cotton price changes for the close following the release of the September reports. Since 1980, December cotton has closed higher 23 times and lower 11 times. Prices had closed higher seven of the past eight years. After today, we can make that eight of the past nine years.