Keith Brown DTN Contributing Cotton Analyst    

Cotton was materially lower Thursday undermined by USDA's latest supply-demand updates. The market was unable to feed off the benign CPI data. Inflation for calendar December was down 0.1% versus expectations of its being flat.    

From USDA website the following summary was provided: This month's U.S. 2022-23 cotton forecasts include higher production and ending stocks, no change in U.S. mill use and lower exports. Production is 438,000 bales higher, at 14.7 million, with yield at a record 947 pounds per acre, up 9% from the December estimate. Exports are forecast 250,000 bales lower, at 12.0 million, with both projected world trade and the U.S. share slightly lower this month. Ending stocks are up 700,000 bales to 4.2 million, equal to 30 percent of projected use. The upland season-average price received by U.S. farmers is projected 2 cents lower this month at 83 cents per pound. World 2022-23 ending stocks are forecast 370,000 bales higher this month as lower production is more than offset by a reduction in consumption. World production is forecast 330,000 bales lower than it was in December as lower production in India more than offset gains in the United States and Brazil. Projected world consumption is 850,000 bales lower this month, at 110.9 million bales, a 5.7% decline from the previous year. Compared with the December outlook, India's 2022-23 consumption is forecast 500,000 bales lower, with smaller declines for Indonesia and Vietnam. Projected world trade is down 600,000 bales, to 41.7 million, as projected exports from the United States, India, and Argentina decline. Imports by China, Indonesia and Vietnam are also projected lower.      

Thursday CPI fell some 0.1% for the month, in line with the Dow Jones estimate. That equated to the largest month-over-month decrease since April 2020. At that time, most of the country was in COVID lockdown. Even with the decline, headline CPI rose 6.5% from a year ago.    

The market will be closed this Monday for MLK, thus all sorts of adjusting and positioning can unfold Friday. To that end, the CFTC will issue its weekly commitment of traders report. Last week, the latest count had the managed-money funds net long 11,400 bales.     

Heading into Friday, spot March is down 3.64 cents on the week and off 1.33 cents on the month.    

Thursday, March 2023 finished at 82.04 cents, down 2.22 cents, July settled at 82.35 cents, down 2.01 cents and December 2023 ended at 80.08 cents, 1.50 cents lower; estimated volume was 39,102 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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