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ICE Cotton Settles Higher after USDA Cuts Output, Stocks Estimate

11 Jul 2020 8:34 am
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Mumbai (Commodities Control) – ICE cotton futures extended gains on Friday after a federal supply and demand agency reduced its projection for global production and ending stocks for the 2020/21 crop year.

Cotton contracts for December rose 42 points to settle at 64.31 cents per lb. October Cotton closed at 64.71cents, up 37 points. March 21 Cotton closed at 64.83 cents, up 34 points and May 21 Cotton closed at 65.34 cents, up 33 points.

The United States Department of Agriculture (USDA) in its latest World Agriculture Supply and Demand Estimates (WASDE) report cut its global production estimate to 116.25 million bales from 118.74 projected in June.

U.S. ending stocks are forecast at 6.8 million bales, 1.2 million lower than in June and production estimate slashed by 2-million bales, as per the monthly report.

2020/21 yield is estimated at 820 lbs/acre, down by 5 from the previous estimate. USDA cut new crop exports by 1m bales, but stocks were still down by 1.2 million from production losses.

Global projected ending stocks in 2020/21 are lower this month as well, down 1.9 million bales, largely due to a 2.5-million-bale reduction in projected world production.

While the United States accounted for most of the global decline in production, projections were also reduced for Turkey, Tanzania, and Mexico, more than offsetting a 200,000-bale increase for Pakistan.

Consumption in 2020/21 is projected 115,000 bales lower this month. At 114.3 million bales, consumption is expected to rise 11.7 percent from the previous year’s recession-reduced level.

Support and Resistance for Cotton #2 lies at 62.57 cents and 65.47 cents per lb, respectively.

(Commodities Control Bureau)


       
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