In June, USDA estimated ending stocks at 3.6 million bales. Ahead of this morningΆs report, no one expected much change in the 2012/13 balance sheet, since the marketing year ends July 31. But USDA unexpectedly cut anticipated final old-crop exports by 300,000 bales, raising ending stocks to 3.9 million from last monthΆs 3.6 million.

As for new crop, pre-report trade estimates of production averaged 13.74 million bales, or a 240,000 bale increase from June. Those estimates ranged from 13.25 million to as high as 13.90 million. USDA left production unchanged, at 13.5 million. They also left usage unchanged, so ending stocks rose 300,000 bales, to 2.9 million and slightly below the average trade estimate for a hike to 2.95 million.

It was the changes to the global balance sheet for 2013/14 that hit futures hard. USDA raised estimated beginning stocks by 650,000 bales, estimated production by 860,000 bales and reduced estimated global consumption by 380,000 bales for a net increase in projected global ending stocks of 1.85 million bales. And unlike recent months, when bearish upward revisions were discounted because so much of the increase was for China, where stocks are being held in “reserve”, the stats for China were all unchanged from in June.

Tomorrow morning at 11:30 CDT, USDA will release its July Crop Production Report and accompanying WASDE (supply/demand) updates for both the U.S. and global balance sheets. Here are pre-report trade estimates:

2012/13 Marketing Year: In June, USDA estimated ending stocks at 3.6 million bales. Ahead of tomorrowΆs July update, few are expecting any significant change because there arenΆt any pre-report trade estimates available for old-crop.

2013/14 Marketing Year: In June, USDA estimated new-crop production of 13.5 million bales; exports at 11.0 million and ending stocks at 2.6 million bales. Ahead of tomorrow morningΆs July update, the average trade estimate for production is 13.74 million bales, ranging from as low as 13.25 million to as high as 13.9 million. The average trade estimate for ending stocks tomorrow is 2.95 million, up 350,000 from June, and in a range from as low as 2.6 million (uch from June) to as high as 3.26 million, up 660,000 bales from June.

HereΆs the weekly chart for cotton as of todayΆs close:

Cotton is in an “ascending triangle” formation, bordered by support along an uptrend line as shown, but overhead resistance in the 92.50 – 93,00 zone. TodayΆs firm price action is tied to drying conditions in Texas and parts of the Delta that could show up as lower crop condition ratings on Monday.