Worse-than-expected supply projections sink US cotton futures to historic lows

USDA’s September cotton supply and demand projections have showed cuts in consumption, compared to August, not only in China and other foreign customers, but also within the USA. Meanwhile, US cotton production projection was reviewed upwards.

Many trade experts were puzzled when in August, the USDA simultaneously lowered US cotton yield and substantially increased projected abandonment. The resulting projection of U.S. production was 13.08 million bales, which was below most estimates.

On the back of the news, cotton futures moved lower last week after a rally on a smaller-than-expected U.S. crop increase in new supply-demand estimates quickly lost momentum on slower world mill use and economic uncertainties, highlighted trade press.

US cotton futures close at 62.40 cents, the lowest since August,11

Indeed, the cotton closed at 62.40 cents, which has been marked its lowest finish since Aug, 11, published ‘Southwest Farm Press’.

Currently, US all-cotton production is fixed at 13.428 million bales, up 346,000 bales from the August estimate but 2.9 million bales below the 2014 crop, also short from analysts´ estimated crop of 13.78 million bales.

New projection reflects an enlarged extension for harvest, and a lower yield. Also, the fact that China’s cotton stocks remains near historic highs, indicates that Beijing is expected to limit imports, what would likely affect the US cotton consumption.