December 10,2020
Interesting news from the USDA Reports that came out today are making the market move. As of right now it is 74.05 for March up from 72 at close yesterday. The USDA Crop Production Report has reduced its forecast for bales down 7% to 15.9 million bales for all cotton, and 15.4 million for Upland cotton. From a market perspective this certainly helps move the stocks to use ratio in the right direction. This was a big surprise to me as the Top Third marketing call this week had not mentioned the expectation of such a drop. The FAS report show next sales for new crop was 403,000 bales which is up 45% from last week, 61% from the 4 week average, and up 30% from 277,100 bales a tear ago. Exports were 323,200 bales up 79% from the previous week and 38% from the prior 4 week average.
The WASDE report showed that a lot of the reduction in US production has come from Texas. With the decrease in production and increase in exports ending stocks are at 5.7 million bales or 33% of use. This ratio is the second highest since 2007/08. On a global look India and Pakistan both are showing 500,000 bales reductions and consumption is up 13% over 2019/20. This moves world ending stocks to a forecast of 97.5 million bales, 1.9 million lower than in 2019/20.
The USDA Cotton Ginnings report shows total Upland Cotton at 9,356,450 bales for this crop, which is the lowest by far for this point in the last four years. Georgia is at 1,008,750 bales compared to 1,758,300 bales at this point last year. Anecdotal information I have gathered from various vendors and contacts are other gins shows that the area south and west of us in Georgia have had significant yield loss in addition to a late start and even worse seed coat fragment issues than us. Some gins are already cutting out ginning days due to lack of cotton, while other gins are predicting up to a 1/3 reduction in total bales year over year. I have not heard of any yield issues from growers in our area, in fact most have said they expect good yields.
If you would like copies of the actual reports, you may go to https://www.usda.gov/media/agency-reports or let me know what you want and I will get it for you.
Thanks,
Gary Evans
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