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WASD - Cotton

Jun 12, 2012

COTTON: This month’s U.S. cotton estimates for 2011/12 and 2012/13 show small revisions

in trade, which leave 2012/13 ending stocks unchanged from last month. The 2012/13

production estimate of 17.0 million bales also is unchanged, pending further information

about planted area and weather developments. Exports for 2011/12 are raised by 200,000

bales, reflecting recent strong sales and shipments, while exports for 2012/13 are reduced by

200,000 bales, due to lower expected foreign import demand. Domestic mill use is

unchanged. The projected range for the 2012/13 season average price received by

producers is 60 to 80 cents per pound, 5 cents below last month on each end.

The world 2012/13 cotton projections include lower production, consumption, and trade

relative to last month, with beginning and ending stocks projected slightly higher. World

production is down 1.4 million bales, as the southern hemisphere producers of Brazil,

Australia, and Argentina are expected to make further cuts in area in response to the recent

sharp drop in cotton prices. World consumption is reduced about 1.0 million bales, as

decreases for China and Thailand are partially offset by an increase for India. With world

prices falling, China’s reserve floor price will make it increasingly difficult for mills there to be

competitive producers of yarn. China’s 2012/13 imports also are reduced due mainly to

larger estimated beginning stocks, accounting for most of the almost 700,000-bale reduction

in world trade. World ending stocks projected at a record 74.5 million bales are raised 1

percent from last month, with China expected to hold 42 percent of the total.

The most significant revisions to the world 2011/12 cotton estimates include an increase of

nearly 1.8 million bales in China’s imports, reflecting the continued strong pace of deliveries,

and corresponding increases in exports for India, Brazil, Australia, the United States, and

Malaysia. India’s balance sheet also is revised to reflect recent indications of higher

consumption; a residual has been added for each year beginning in 2006/07 to offset a deficit

in stocks that would otherwise result from the available statistics for production, consumption,

and trade.

DISCLAIMER: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Read Entire Disclaimer.

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