The U.S. cut its cotton-crop estimate for a third straight month on declines in Texas, where the worst drought in at least a century reduced production. Forecasts for global production and demand were also lowered.
U.S. output will total 15.67 million bales in the harvest that started in August, down from 15.83 million projected last month, the Department of Agriculture said today in a report. Nine analysts surveyed by Bloomberg News expected 15.76 million, on average. The previous crop was 18.1 million bales.
Texas, the biggest U.S. cotton grower, recorded the driest October-September period since record-keeping started in 1895, according to the National Drought Mitigation Center in Lincoln, Nebraska. The USDA also cut its estimate for U.S. exports and for use in China, the worldΆs biggest consumer, boosting the outlook for inventories.
“Consumption was cut in China and a host of Asian importers,” Chris Kramedjian, a senior risk-management consultant at INTL FCStone in Nashville, Tennessee, said in a report. “The cuts in consumption were only partially offset by lower production in the U.S. and India.”
Cotton futures for March delivery fell 1.7 percent to 95.25 cents a pound at 11:21 a.m. on ICE Futures U.S. in New York, heading for the biggest drop since Dec. 14. Before today, prices slumped 56 percent from a record $2.197 reached in March as world economies slowed.
The U.S., the largest exporter, may ship 11 million bales in the marketing year that began on Aug. 1, compared with last monthΆs forecast for 11.3 million, the USDA said. The agency attributed the decline partly to overseas competition.
Stockpiles Increase
U.S. stockpiles at the end of the season will total 3.7 million bales, up from the agencyΆs prior estimate of 3.5 million, according to the report. A bale weighs 480 pounds, or 218 kilograms.
China will import 16 million bales, up from 15.5 million forecast in December. At the same time, the USDA cut its projection for Chinese use to 44 million bales from 45 million in the previous estimate.
“Consumption is estimated 1 million bales lower for China, as the substantial accumulation of cotton in the national reserve is expected to support prices and constrain mill use,” the agency said in the report. China is the worldΆs top grower, consumer and importer.
World output will be 122.84 million bales, less than last monthΆs forecast of 123.42 million, the USDA said. Production was cut mainly in the U.S. and India, the worldΆs second-biggest grower.
Global use will be 109.99 million bales, down from the projection of 111.34 million in December, the USDA said. World stockpiles as of July 31 will total 58.35 million bales, compared with the previous estimate of 57.67 million, the agency said.
