Agfax Buzz:
    May 10, 2013
    oa-cleveland-mississippi-05182012

    Cleveland on Cotton: USDA Says 93M Bales Ending Stocks; China Keeps on Stockpiling

    AgFax.Com - Your Online Ag News Source

    What to make of it—the May USDA Supply Demand Report…One analyst, two days before the report was released called it meaningless and called for the market to ignore it. Thankfully, most in the soft commodities believe her to be meaningless, insignificant and seldom correct with forecasts.

    Give USDA its due. It truly is charged with leading the battle into unchartered cotton waters, and is expected to be near correct. Too, more often than not and by hook or crook, they are generally correct. Criticize their numbers or even their analysis, but never their methodology. They are the masters.

    The cotton market was merrily rocking along after a few rough weeks and headed to a good solid week of gains until the Friday noon release of the USDA report. Viewed as bearish by the market, prices fell from a two digit gain on the day to triple digit losses. Still, for the week the July contract was up 5 points while December climbed 91 points. You should correctly imply from this that the back end (new crop) is more bullish than the front end (old crop) of the market. Interesting, to me anyway, the report did not hold forth any bearish news. Yet, it had one bit of bullish news. That is, U.S. exports for the current year were increased from 13.0 to 13.25 million bales.

    The market appears very much locked within its 82-84 cent support at the low end and 88-89 cent level on the top end.  Too, as evidenced by the selloff after the release of the May supply demand report we should expect a continuation of the nervousness and volatility that surfaced in April. However, such trading should be confined to the aforementioned support and resistance.

    The USDA forecast for 2013-14 included lower production, exports and ending stocks. Consumption was increased over the 2012-13 estimate of 110.43 million bales compared to the current year’s use of 108.15 million bales. U.S production is forecast at 14.0 million bales, down from this season’s 17.3 million. Due to the smaller crop exports were forecast at 11.5 million bales, below the current aforementioned 13.25. USDA projects world ending stocks at 93 million bales.

    The initial 2013/14 world cotton projections show world ending stocks of nearly 93 million bales, the third consecutive seasonal record, as China’s policy of stockpiling cotton in its national reserve is assumed to continue. World production is projected nearly 3 percent lower than 2012/13 at 117.8 million bales. World ending stocks outside of China are projected to fall nearly 2.0 million bales, suggestive of prices continuing to trade near the 90 cent level, basis the New York nearby.

    China’s national reserve stocks are currently expected to reach nearly 40 million bales at the end of 2012/13. Based on the government of China’s current reserve purchase and release prices and import quota policies, USDA is projecting that China will import 12.0 million bales in 2013/14 and will add 10 million bales to ending stocks as reserve purchases exceed reserve sales. The resulting projected China ending stocks of 58.2 million bales would account for 63 percent of world stocks.

    WASDE Cotton: Abandoned Acres Reduce Projections

     


    2 Responses to Cleveland on Cotton: USDA Says 93M Bales Ending Stocks; China Keeps on Stockpiling

    1. Ali says:

      What if Chine releases its stocks in the middle of the season and starts exporting its reserved stocks? What will be its effect on market?

      • Owen Taylor says:

        Off hand, the word “distorted” comes to mind. Whether China did that would likely hinge on world prices and whether it needed the cotton more than it needed to take a profit on the chance it could buy it back later at a lower price if it needed it.

        Granted, China has done things like that in the past.

        The argument is often made that the U.S. is simply warehousing China’s raw material. But if the price of cotton went up enough that China saw a way to turn some bucks, that should mean prices are good in general.

        Do this it’s likely China would dump corn into the market?

    Leave a Reply

    Name and Email Address are required fields. Your email will not be published or shared with third parties.

    Agfax Cotton News

    National Cotton Council Commends Timely APH Announcement10-22

    Keith Good: APH Yield Exclusion Implementation Draws Praise — Mostly10-22

    Doane Cotton Close: Positive Chinese Economy Boosts Prices10-21

    Farm Shop Dream Requires Thoughtful Planning – DTN10-21

    DTN Cotton Close: Snaps String of Five Lower Finishes10-21

    Texas Crop Weather: El Niño Stalled Out but Cool, Wet Winter Still Predicted10-21

    USDA to Implement APH Yield Exclusion for 2015 Spring Crops10-21

    AgFax Cotton Review: Lower Acres May Close Mill; Australia Acres Up10-21

    DTN Cotton Open: Near Unchanged in Tight Ranges10-21

    DTN Fertilizer Trends: High Costs May Alter Growers’ Tactics for 201510-21

    Keith Good: Tumbling Grain Prices May Prove Costly for Taxpayers10-21

    AFB Cotton Close: Selling Accelerates10-20

    Doane Cotton Close: Weakness in Prices Carries On10-20

    Mississippi: Rains Slow Harvest, Lodge Rice, Soybeans – USDA10-20

    Tennessee: Rains Halt Field Activities – USDA10-20

    Arkansas: Rains Damage Crops, Slow Harvest – USDA10-20

    North Carolina: Corn Harvest Enters Final Stretch, Rains Delays Continue – USDA10-20

    Florida: Harvest Continues, Peanuts Reach 69% – USDA10-20

    New Mexico: Dry Soil Conditions Persist — USDA10-20

    Missouri: Corn Harvest Over Half Finished, Cotton at 30% – USDA10-20

    Texas: Harvest Chugs Ahead – USDA10-20

    Arizona: Cotton 50% Defoliated, 28% Harvested – USDA10-20

    Kansas: Row Crops Harvest Behind Average Pace — USDA10-20

    Oklahoma: Corn Harvest at 76%, Soybeans 22 — USDA10-20

    South Carolina: Peanut, Cotton Harvests Pick Up – USDA10-20

    Herbicide Resistant Weed Summit’s Slides, Webcast Available Online10-20

    Georgia: Cotton, Peanut Harvests in Full Swing – USDA10-20

    Alabama: Rains Have Harvest at a Standstill – USDA10-20

    DTN Cotton Close: Mixed as December Premium Narrows10-20

    Louisiana: Soybean Harvested Wraps Up – USDA10-20

    California: Cotton, Rice Harvests Speed Along – USDA10-20

    Virginia Cotton: This Year is Going to be Special10-20

    DTN Cotton Open: Ticks Lower as Inversion Narrows10-20

    Flint on Crops: Cover Crops Provide Many Benefits10-20

    Keith Good: Lawsuits Concerning GMO Corn Mount Against Syngenta AG10-20

    AFB Cotton Close: Dec. Moves Lower10-17

    Rose on Cotton: Dec Contract Still Under Pressure10-17

    Cleveland on Cotton: Exports Lowest in ‘My Memory’10-17

    DTN Cotton Close: Mixed As Dec. Loses Ground10-17