NASS has suspened weekly crop progress and condition reports across all crops at the national level, even though last week’s final report showed cotton harvest only 77% complete, the same as last year but three points behind the 10-year average. Among the 15 states accounting for 98% of last year’s crop, AR, LA, MS and CA are near complete with less than 5% still in the field. Furthest behind their five-year average were TX, OK and KS, all three with nearly half the crop yet to harvest.
Futures are on the defensive again as the trade braces for a December crop report from USDA that will likely add to the size of the 2014 cotton crop. We had some confidence that USDA might offset any increase in crop size with a higher export estimate until last Thursday’s weekly export sales report showed sales had suddenly tapered off.
Export sales had been running well ahead of the pace needed to warrant USDA’s current export forecast of 10 million bales with a “cushion” of nearly 300,000 bales. But the strong dollar may be taking its toll. Weekly sales this week were off 45% from last week and 5% below the 4-week average. And the “cushion” of sales in excess of where they need to be to warrant USDA’s forecast for 10 million bales to be exported has shrunk to about 200,000 bales.
USDA will issue a new crop estimate and WASDE report Wednesday of this week and most private analysts expect them to hike the production estimate for the U.S. But this might be neutralized by a hike in USDA’s export forecast. And globally, the fundamentals may finally improve a bit. Last Thursday, USDA’s ag attache’ lowered forecast ending stocks for China to 58.4 million bales, down 3.8 million (6%) from USDA’s November WASDE estimate of China’s likely ending stocks. Reason cited: China’s production was a bit lower than earlier estimated and consumption a bit more robust.
But global stocks still remain historically high relative to usage and only a significant drop in global acreage and/or weather problems in 2015 will launch cotton out of its apparent “trading range” between mid-50s and low 60s.
