Cotton futures leap nearly to 19 cents a pound after the US cuts 200,000 bales from its estimate for 2021-22 production


Cotton futures gained after the US downgraded its harvest and cut to just 50,000 bales its forecast for its stocks rebuild, outperforming a muted performance by grains after supply data exceeded market forecasts.

Cotton futures for March leaped 2.6% to touch a contract high of 18.99 cents a pound at one point, before easing back to 118.04 cents a pound, up 2.0% on the day.

The headway followed the release by the US Department of Agriculture of a series of reports, including its benchmark Wasde briefing on world ag supply and demand, which cut by 200,000 bales to 3.20m bales the forecast for US cotton stocks at the close of 2021-22, in July.

The downgrade contrasted with investor expectations of a small upgrade in the inventory figure, and a bigger rebuild from the four-year low of 3.15m bales at which stocks ended last season.

‘Uncompetitive prices’

By contrast, Chicago soft red winter wheat futures dipped by 2.2% at one point, to $7.53 a bushel, before recovering some ground to stand at $7.58 ¾ a bushel, after the Wasde raised by 30m bushels to 628m bushels the forecast for US all-wheat stocks at the close of this season.

The upgrade – which reflected a reduction to export expectations, with the USDA blaming “uncompetitive” prices for a “sluggish” US trade performance – was 20m bushels more than investors had forecast.

Furthermore, the USDA, in a separate briefing on US winter wheat seedings ahead of the 2022 harvest, reported sowings at 34.40m acres, a six-year high, and more than 140,000 acres above market expectations.

Plantings of soft red winter wheat, at 7.07m acres, expanded by more than 420,000 acres year on year, rather than by the 90,000 acres that the market had pencilled in.

South America crop downgrade

Corn futures for March, after a volatile spell initially after the data splurge, stood at 6.01 ½ a bushel in late deals, up 0.1% on the day.

The USDA raised its forecast for US corn stocks at the close of 2021-22 by 47m bushels to 1.54m bushels, exceeding investor expectations, as it raised its estimate for the domestic harvest by 53m bushels to 15.12bn bushels, the second largest on record, on an increased area figure.

For soybeans, the US raised its 2021 harvest estimate too, by 10m bushels to 4.44bn bushels, taking it to a record high, on an increased yield number.

However, with the US stocks figure of 350m bushels in line with investor expectations, and a cut of 9.5m tonnes to the forecast for the combined harvests of Argentina, Brazil and Paraguay, thanks to weather setbacks, soybean futures for March rose 1.0% to regain the $14.00-a-bushel mark.

‘Revised yields’

The US said that its cotton harvest downgrade, of 660,000 bales to 17.6m bales, was “largely due to revised” yields for Texas, the top growing state.

The Texas yield was reported at 695 pounds per acre – up 10 pounds per acre year on year, but below the 731-pound figure reported last month.

The production downgrade was offset in part by a cut to US export expectations in 2021-22, of 500,000 bales to 15.0m bales.

“Exports are reduced with a lower US crop, continuing logistical issues in the United States and elsewhere, and a decline in projected world trade.”







Investors had expected the USDA



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Cotton jumps after USDA trims U.S. output, ending stocks outlook – Reuters

12-Jan-2022 17:19:28

Jan 12 (Reuters) – ICE cotton futures rose more than 2% after the U.S. Department of Agriculture lowered U.S. production and ending stocks estimates for the 2021/22 crop year in its monthly supply-demand report.

In its latest World Agriculture Supply and Demand Estimates (WASDE) report, the USDA lowered U.S. production estimates by 660,000 bales to 17.6 million bales, largely due to revised Texas yields.