Keith Brown DTN Contributing Cotton Analyst
USDA issued its May crop report, which was viewed as positive. In addition, the weather for West Texas remains doggedly hot and dry. The U.S. dollar did post a 21-year high Thursday and the Dow fell another 500 points (as of this writing).
From USDA's website, here is a reprinted summary of the supply-demand report:
"Despite an expected 1-million-acre year-to-year increase in U.S. area planted to cotton, the U.S. cotton projections for 2022/23 include a smaller crop as abandonment is projected to be more than double. Production is forecast at 16.5 million bales, based on 12.2 million planted acres as indicated in the March Prospective Plantings, but harvested area is expected to fall 1.1 million acres to 9.1 million as limited precipitation in the Southwest suggests more abandonment compared with 2021/22's below-average level. With a higher national yield, production is forecast about 1 million bales lower. With a larger carry-in, supplies are projected slightly lower. Exports are also expected to fall slightly, to 14.5 million bales, as the U.S. share of world trade declines. At 2.9 million bales, 2022/23 U.S. ending stocks are projected 500,000 bales lower than the year before, and equivalent to 17 percent of total use. The marketing-year average upland farm price is projected at 90 cents per pound, down slightly from the previous year's record high. For 2021/22, U.S. cotton production is reduced by about 100,000 bales from last month to 17.5 million bales. Exports and consumption are unchanged, and ending stocks are estimated 100,000 bales lower, at 3.4 million. The projected season-average price is 1 cent higher than in April, at 92 cents per pound. Global supplies in 2022/23 are projected below a year earlier, as lower beginning stocks more than offset a 2.6-million-bale increase in production, with consumption and ending stocks also lower. Increased area is expected to drive production balance sheet reduced estimated consumption the China's forecast is reduced 500,00higher, with a 2-million-bale increase expected in India's crop, 500,000-bale gains expected in China and Turkey, and smaller increases forecast for Uzbekistan, Pakistan, and Mexico. World consumption in 2022/23 is projected to fall 1 million bales from the year before to 122 million bales, with cotton prices currently the highest since 2011 and the highest ever relative to polyester. World ending stocks are expected to fall 1 percent from the year before, to 82.8 million bales. World trade is expected to rise 2 million bales as China's imports partly rebound. The global 2021/22 estimates show lower production and use compared with the previous month. India's crop is reduced 1 million bales as late-season marketings fell, accounting for much of the 1.8-million-bale global decrease. Projected world consumption is down 1.1 million bales from April as China's forecast is reduced 500,000 bales and historical revisions to Uzbekistan's 0 bales and historical revisions to Uzbekistan's balance sheet reduced estimated consumption there 500,000 bales. Ending stocks are slightly lower as well, down 270,000 bales to 83.6 million."
Friday, the CFTC will publish its traders updates. Of course, one of the key categories is the managed-money funds. Last week they bought 3,422 contracts, swelling their net long position to 72,695. Given all the recent ruckus in the market, it will be interesting to see where they currently stand.
For Thursday, July cotton settled at 145.53 cents, up 1.93 cents, December closed at 127.67 cents, up 2.92 cents and March 2023 finished at 122.35 cents, 2.76 cents higher; estimated volume was 26,972 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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