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USDA cotton data seen friendly

US crop up slightly due mostly to Ga with an increase of 80K, nickel and dime changes elsewhere. US area, planted and harvested, reduced slightly, due mostly to Tx with the national yield up a bit to 821 lbs/ac. US production final figure is 18.315 mln bales unless final ginnings dictate a change. Domestic usage is up the same as production so no change to carryout.

On the World front, increased consumption by India in ‘09 and ’10 lowered beginning stocks and usage for this crop year by a combined 650K bales. As for production, Brazil and the CIS group saw their crops rise but significant changes in small countries such as Syria and others pulled the global crop down by 70K to 115.46 mln bales. Trade saw reductions in Brazil, Pakistan, CIS, Afr Fr Zone pulling net imports/exports down by 300K or so. Ending stocks as of Jul 31, 2011 are forecast at 42.84 mln bales, a loss of 550K from the December report but a hair above the Nov nbr of 42.20 mln. Note: World ending stocks were cut in India, the one country with plenty of cotton so the reduction is not as noticeable to supplies as would be the case elsewhere with the exception of their convoluted export policy.

BOTTOMLINE RE PRICES: Today’s reports are friendly but near that expected by the industry so few, if any, surprises. As mentioned, in my one-liner email, technicals (holding the low end of the trading range) and India’s piece-meal export allocation may explain part of the 13 cent rally in the past 3 days. In addition, grain/bean numbers are more bullish than projected and cotton may be attempting to keep producers’ focus on planting it rather than alternative crops.If cotton can not close near or at its highs, we may have a short-term high basis March. This recent rally has given July the chance to get within a limit move of its Nov highs and the Dec 11 hit new contract highs this morning.


Sharon C Johnson, @Copyright 2011

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