Interviews
Cotton prices move marginally lower
07 Apr '07
3 min read
While U.S. plantings will be significantly lower, foreign acreage will be similar to 2006 levels. Additionally, improving yields in notable countries, especially India, will likely result in 2007 world cotton production being at least equal, or slightly greater than 2006 production. The U.S. will be the only country to significantly reduce production. However, the U.S. will see its 2006-07 season ending carryover balloon to better than 9.0 million bales. Thus, there will not be any shortage of U.S. cotton available for export in the next three years.
The export market has now had three consecutive outstanding weeks. Net sales of upland cotton for the week ending March 29 totaled 358,900 bales. China, as expected was the primary buyer purchasing 203,200 bales. Shipments continued to lag with just 284,700 bales exported with only about one third of that going to China.
While this represents solid sales to China, the buying is likely coming too late to allow the U.S. to reach the USDA export projection. While some import quotas have been released by the Chinese bureaucracy, the expected announcement as to the amount of cotton that could be imported has not been released.
There is debate within the bureaucracy whether to piecemeal the quotas or to show their hand and announce the entire quota at once. Possibly it would less disruptive to the New York market to piecemeal the announcement, but then it only prolongs the uncertainty of marketparticipants as they attempt to determine how much cotton China will import.
Washington is expressing little enthusiasm for any major changes in the farm bill. The status quo seems to have the necessary support. Thus, it is likely that Congress will pass another five year farm bill that, for row crops, will be little changed. Nevertheless, there is a battle to be one and growers should not sit back and "expect" the legislation to pass. They must be proactive.
The export market has now had three consecutive outstanding weeks. Net sales of upland cotton for the week ending March 29 totaled 358,900 bales. China, as expected was the primary buyer purchasing 203,200 bales. Shipments continued to lag with just 284,700 bales exported with only about one third of that going to China.
While this represents solid sales to China, the buying is likely coming too late to allow the U.S. to reach the USDA export projection. While some import quotas have been released by the Chinese bureaucracy, the expected announcement as to the amount of cotton that could be imported has not been released.
There is debate within the bureaucracy whether to piecemeal the quotas or to show their hand and announce the entire quota at once. Possibly it would less disruptive to the New York market to piecemeal the announcement, but then it only prolongs the uncertainty of marketparticipants as they attempt to determine how much cotton China will import.
Washington is expressing little enthusiasm for any major changes in the farm bill. The status quo seems to have the necessary support. Thus, it is likely that Congress will pass another five year farm bill that, for row crops, will be little changed. Nevertheless, there is a battle to be one and growers should not sit back and "expect" the legislation to pass. They must be proactive.
O.A. Cleveland
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