Keith Brown DTN Contributing Cotton Analyst
The cotton market was somewhat higher Monday, inspired by adverse weather unfolding across the Belt, as well as continued supporters from Friday's acres report.
The report showed U.S. 2023-24 cotton planted area at 11.087 million acres versus an average trade expectation of 11.119 million and a range of expectations from 10.5 to 12.0 million. This was down from 11.256 million in the March Prospective Plantings report and from 13.763 million last year.
Mathematically, the new planted acreage suggests U.S. 2023-24 production would be around 16.24 million bales, versus the 16.5 million from USDA's June 9 Supply and Demand report. Last year, the crop was 14.47 million bales.
Crude oil traded two-sided Monday, after Saudi Arabia and Russia announced supply cuts for August. However, fears of global economic slowdown and the potential for further increases to U.S. interest rates bearishly kept that supply news in check. Saudi Arabia on Monday said it would extend its voluntary cut of one million barrels per day (bpd) for another month to include August, while Russia indicated it will reduce its oil exports by 500,000 bpd in August. The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ to 5.16 million bpd.
Monday afternoon, USDA will issue its crop condition numbers. The updated U.S. Drought Monitor now shows some 18% of the cotton area is in drought conditions. That amount is up from the prior 16% drought coverage. Last week, the U.S. crop was rated 49% good to excellent, up from the prior reading of 47%. One year ago, the crop was rated at 37% good to excellent.
July cotton remains in its delivery. There were no deliveries issued Monday. To date there have been 171 notices tendered. The contract expires this Friday.
The ICE Cotton will be closed Tuesday in observance of Independence Day.
Monday, July cotton settled at 82.84 cents, up 1.59 cents and December ended at 80.37 cents, up 1.34 cents and March was 80.25 cents, 1.21 cents higher. Estimated volume was 32,964 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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