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Total cotton plantations likely to lower 28%, USDA

02
Jul '07
The USDA surprised the cotton world with the news that there will be at least a half million acres fewer planted to cotton in the US than what the market was counting on. USDA estimates that total Cotton plantings for 2007, upland and pima, will be 28 percent below last year and a reduction of 1,089,000 acres just since the March 31 intentions report.

Biggest reductions by far were in Texas were plantings were cut 710,000 from March and a whopping 1.4 million acres from last year. Other sizable cuts, but nothing like Texas, came from Georgia, Tennessee, Mississippi, Alabama and Louisiana where a total of another 330,000 were switched since March.

Respected commercially oriented traders and merchants now estimate that this acreage number at least initially implies a crop of 17.25 to 17.5 million bales vs. the 18.8 currently carried by USDA in their supply/demand estimates. If the shock of the plantings report were not enough to create volatility, it was also the end of the month and end of the quarter when many money managers of the large funds either tuck in profits or add to winning positions.

December cotton ended the session Friday at 6333, up 170 for the day, a 236 winner for the week and 667 higher for the month - just for the record, December cotton bottomed exactly seven weeks ago, nearly 1,200 points lower at 5160. USDA set this weeks AWP at 5145, a jump of 248 points which dropped the LDP from 3.03 cents per pound to .55 (point 55) - FYI at the beginning of the six week blending period, the AWP was 40.12.

In other markets, Gold lost $3 for the week and $10 for the month. Crude oil gain $1.50 for the week and about $6.50 for the month. Grains ended one of their most bazaar weeks in traders memory with soybeans gaining 51 cents put corn losing 30 to 36 cents.

Chicago wheat lost 8 cents for the week while KC wheat gained almost 15 cents and Minneapolis almost 28 cents. For the month, corn lost about 60 cents lower while soybeans gained 44 cents. The Dow Industrials managed to gain 44 points for the week but after a month of choppy trade still lost about 15 points for the period. In other news this week, the Chinese government made an attempt to stop sky rocking cotton prices by releasing over a million bales from their strategic reserves to help their mills make it until new crop.


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