US Department Of Agriculture Forecast Cotton Output: Cotton Price Rise Is Limited

Cotton market is facing potential oversupply, and the rise of cotton futures price is stagnant. The US Department of agriculture raised its forecast for cotton production in the US and the world on Friday, putting down cotton futures prices to below 74 cents a pound.

Since August 3rd, cotton futures prices have risen by 6.8% in spite of foreign demand for cheap cotton in the United States and the impact of market drought on cotton growth. However, in Friday's World Report on supply and demand of agricultural products, the US Department of agriculture raised the cotton production forecast for the 2012/13 market year (beginning in August 1st). The Ministry of agriculture now forecasts that the cotton production in the 2012/13 market will be 17 million 700 thousand standard pack (1 standard package (Bale) =480 pounds =0.217728 tons), 4% higher than the forecast value last month. Independent cotton analyst MikeStevens said: "this is obviously limited. Cotton price The rally. "

Market participants are worried that with the global economic uncertainty, cotton will compete with cheaper man-made fibers, and if additional supply is increased, the surplus will be oversupplied. cotton market The pressure is increasing. Market participants say cotton is very sensitive to global macroeconomic events such as the European debt crisis and slowing Asian growth, because consumers usually limit spending on clothing and prefer food and energy to these events.

Morgan Stanley cited the fact that China's domestic consumption is decreasing. The agency commented on the day of its report that today's report continues to reflect the theme of weakening global demand. China is the largest importer and consumer of cotton in the world.

Last Friday, the ICE American futures exchange delivered in December. Cotton futures The contract fell 3.9% to 73.02 cents, and last Thursday, the contract hit 11 weeks high 77.07 cents. The slack October contract, which is the month contract, also fell 3.6% to 72.90 cents last Friday.

Before the Ministry of agriculture forecast the release, the Dow Jones survey showed that analysts surveyed expected that the output of cotton in the United States would be mildly reduced by the Midwest drought. However, the US Department of agriculture survey shows that the growth of cotton crops is better than expected. August is the first month for the Ministry of agriculture to investigate cotton fields in its monthly report.

INTLFCStone economist GaryRaines said that the August forecast was based more on field visits rather than computer generated forecasts. "It seems that the situation in the southeastern region and delta is better than expected." Unlike the Midwest, which has been scorched by the scorching sun, rainfall has recently come to the foregoing regions.

However, cotton production in the United States is still likely to be under repair. Stevens said that Texas's cotton production will have a great impact. If the area fails to get rainfall, the total output will still be reduced.

The amount of cotton storage in the world was also revised up to 3.1%, hitting the record value of the 74 million 700 thousand standard package. The US Department of agriculture predicts that China will control about 46% of these stocks, if the country's 2012/13 cotton reserves grew by 20%.