The US ditched expectations of a record cotton yield this year, citing hurricane damage to crops, in reports which also flagged as a “major wild card” the potential for fresh Chinese imports of the fibre.
The US Department of Agriculture, in its much-anticipated Wasde crop report, cut its forecast for the domestic cotton harvest this year by 643,000 bales “largely in Texas and Georgia”, the top two producing states.
The downgrade – which followed a reassessment of crops in the light of Hurricane Harvey, which ravaged south east Texas, and Hurricane Irma, which struck further east – reflected reductions to expectations for both harvested area and yield.
The US cotton yield estimate was downgraded by 19 pounds per acre to 889 pounds per acre, taking it back below the current record of 892 pounds per acre recorded in 2012.
‘Strong competitor shipments’
With the estimate for US cotton exports for 2017-18 reduced too, “due to reduced US production and strong competitor shipments”, the impact of the revisions was to cut the estimate for the country’s cotton stocks at the close of the season by 200,000 bales to 5.80m bales.
That was modestly above the 5.75m-bale figure investors had expected, according to a Bloomberg survey.
Cotton futures for December stood 0.8% lower at 68.18 cents a pound in late deals in New York.
The USDA, while cutting hopes for US cotton exports this season, raised expectations for shipments from Australia by 300,000 bales to 4.10m bales, citing “robust early-season” trade.
The forecast for exports from India, the second-ranked shipper after the US, was lifted by 400,000 bales to 4.60m bales, thanks to ideas of “large domestic production alongside strong nearby demand”.
Import expectations were raised notably for Vietnam, by 300,000 bales to 6.60m bales, on “greater global supplies and attractive pricing”.
The USDA kept its forecast for Chinese imports, historically the world’s biggest, at 5.10m bales, despite acknowledging market talk that the country may be poised to loosen import restrictions, after a second successful year of auctions to run down state inventories.
“China’s cotton import policy remains a major wildcard,” the USDA said.
However, despite “market rumours of possible increased import access, there has been no official indication of any change in the import policy”.