USDA Raises US Export Estimate For Higher Priced Cotton

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USDA Raises US Export Estimate For Higher Priced Cotton

United States Department of Agriculture (USDA) has increased its 2016-17 export forecast by 200,000 bales to 12.7 million of US cotton in its monthly World Agricultural Supply and Demand Estimates (WASDE) report that came out Thursday (February 9).

While that may not seem like much, the increase - which occurred with July cotton futures trading around 78% per pound- was seen as almost a lone ray of sunshine among all of the commodity markets reflected in the February WASDE numbers.

"Literally just 60 days ago, USDA was at 12 million bales of exports, and in the last three reports they've increased those by 700,000 bales," said O.A. Cleveland, professor emeritus at Mississippi State University. "In 60-plus days, that's a pretty huge increase. I think this tells us this US crop is so competitive worldwide that these exports are just flying out of here." Dr. Cleveland said he expected the current pace of exports, which totaled 200,000 bales in USDA's latest weekly report, would continue for at least another two months.

'Have to be impressed'

"I think 200,000 bales last week with May at contract highs - you have to be impressed with that," said H.W. "Kipp" Butts, director of energy services and senior analyst, cotton at Informa Economics in Memphis, Tenn. "I don't know how much more we need to increase it, but the evidence says it's more likely to go up than down at least in the short term."

What was even more impressive than the 200,000 bales in last week's report was that China was on a holiday for its lunar New Year, said Dr. Cleveland. "They bought about 3,000 bales of that 200,000."

Jarral Neeper, president of Calcot Ltd., in Bakersfield, California, said he could see 2016-17 exports going as high as 13.3 million bales by the end of the marketing year on July 31. "I don't know if it will hit 13.5 or not, but I think 13.3 is very doable."

That could take ending stocks down, but any decline might be offset by increased production in Texas.

Ending stocks reduced

USDA reduced its forecast of ending stocks from 5 million to 4.8 million bales because its production and mill use estimates were unchanged at 16.96 million bales and 3.3 million bales for the year ending July 31.