Not much to talk about with regard to cotton price action today and that’s because there’s not much to talk about with regard to any new news for cotton either. So I’ll just repeat yesterday’s analysis of USDA’s MARCH WASDE report issued yesterday morning:
Revisions to the U.S. balance sheet were price neutral to a little negative. Pre-report trade estimates of U.S. ending stocks averaged 2.8 million bales, down 200,000 from the February estimate on expectations USDA would cut its production estimate by 100,000 bales while raising exports by 100,000 bales. USDA did cut ending stocks by 200,000, as expected, but by raising exports 200,000 bales and leaving production unchanged at 13.2 million. As for its estimated average farm price range, USDA raised the lower end by 1 cent/lb., putting the new range at 75.0 – 78.0 versus 74.0 – 78.0 in February.
Globally, there were no pre-report trade estimates from wire services, but cotton futures gave up part of their early gains shortly after release yesterday because ending stocks rose 280,000 bales, to 96.75 million bales from 96.47 million in February. But even that was muted somewhat by the fact that estimated stocks for China were raised by 500,000 bales, nearly double the increase in global stocks.
And it’s still unclear how bearish rising stocks for China are when it’s unclear how aggressively they will meter reserve stocks into their domestic market. It was perhaps more significant that the hike in China’s ending stocks stemmed directly from a downward revision in estimates Chinese domestic use of cotton in the same amount, 500,000 bales for the 2013/14 marketing year. That could be due to domestic mills deferring late season purchases until the 2014/15 marketing year, when China has already announced it would be sharply reducing the offering price of reserve cotton stocks closer to world prices.
NO ADVICE CHANGES STEMMING FROM TODAY’S REPORTS