Reinhart Cotton Market Report

19 Jul '06

4 min read

INTERNATIONAL:
USDA/World Production and Consumption (in millions of 480 lb. bales) - Both 2006/07 production and consumption were decreased by 280,000 and 704,000, respectively, with ending stocks increasing by 352,000 bales.

Main adjustments were in the crops for the U.S. (-200,000) and Australia (-100,000), along with consumption for India (-250,000), Korea (-100,000), Thailand (-100,000) and the U.S. (- 100,000). Currently, there is a supply deficit of 7.4 million compared to last year at 2.6. Below, the details:

 USDA05/06 USDA06/07 Cotlook06/07 ICAC06/07 Reinhart06/07
 Beginning Stocks 53.98   (54.22)  53.01(53.04)   49.9    53.5
 Production 114.12  (114.09) 114.36(114.64)  113.0   114.1
 Consumption 116.76  (117.07) 121.75(122.46)  122.8   118.5
 Ending Stocks 53.01  (53.04)  47.45(47.09)   45.5   47.5

Mexico - The crop is off to a fair start. The use of transgenic seed varieties is gaining momentum. Farmers have been able to manage the whitefly better this year versus last season. A total of 288,000 acres were planted, yielding a crop of 670,000 (480 lb.) bales, which is slightly up from last year at 630,000. With harvesting advancing in the southern states, a majority of the crop is still unsold due to the low NYK level.

OUTLOOK:
NYK is still in the recent trading range of 51.00 to 54.50. We await fresh news concerning the timing and quantities of forthcoming Chinese import quotas, which should have a significant influence on NYK.

Reinhart, founded in 1788, is one of a handful of leading cotton trading firms annually handling several million bales of cotton worldwide.

Reinhart is also the world's largest trader of Extra Long Staple cotton.

This report is prepared by Paul Reinhart AG, Switzerland.

Paul Reinhart Inc

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