By Duane Howell DTN Cotton Correspondent
U.S. plantings expected to fall nearly 19% this year and abandonment forecast at 16%, USDA says. Ending stocks decline would be the first in three seasons. Cotton futures settled slightly mixed for the day and week Friday after the benchmark May contract fell to a four-session low. May closed off nine points to 83.14 cents, around the lower quarter of its 153-point range from up 106 points at 84.16 cents to down 47 points at 82.76 cents.
Maturing March eked out an eight-point gain to 81.39 cents, July dropped 17 points to 84.01 cents and December managed to gain two points to 83.64 cents. For the week, March was up seven points, May down five points, July down four points and December up 39 points. Volume slowed to an estimated 15,800 lots from 30,798 lots the previous session when spreads totaled 10,939 lots or 36% and EFP 1,908 lots. Options volume totaled 8,553 calls and 5,760 puts.
Projected U.S. cotton plantings of 10 million acres this year, down nearly 19% from the 2012 acreage, are expected to result in harvested acreage of 8.4 million acres, according to estimates reported at USDA’s Agricultural Outlook Forum. The planting reduction is attributed mainly to lower cotton prices and relative net returns that favor shifts to alternative crops.
The abandonment rate of 16% is down from 23.5% in 2012 but above the long-run average. National abandonment rates have been highly variable in recent years, USDA analysts pointed out, ranging from 2.5% in 2010 to a record of nearly 36% in 2011. Because of this variability, USDA based its abandonment forecast on longer-term, 10-year average rates by region. With the Southwest expected to account for over half the U.S. cotton area again this year, crop conditions in this region will have considerable impact on the U.S. crop, USDA analysts observed.
The USDA is forecasting a national average yield of 800 pounds per acre, based on three-year regional averages. Production is projected to fall nearly 18% from 2012 to 14 million bales, lowest since 2009. With carry-in stocks at 4.5 million bales, the total supply — at 18.5 million bales — would decline 9% from 2012-13.
Domestic mill use is expected to rise slightly to 3.5 million bales. High cotton prices, relative to manmade fiber prices, have resulted in fiber substitutions during the past year. But cotton’s fiber market share is expected to improve slowly into 2013-14. Reduced supplies and lower foreign import demand are expected to cut exports nearly 10% to 11.3 million bales. Although foreign import demand is forecast at its lowest in three seasons, the United States is projected to account for a global trade share similar to that in 2012-13.
Projected ending stocks of 3.7 million bales would decrease for the first time in three seasons and would be 25.3% of total use, slightly above the five-year average. Lower U.S. stocks and tighter “free” stocks are likely to support farm prices in 2013-14, USDA analysts said, noting that the ratio of world stocks-to-use outside China is forecast to decline. (Source: Agfax.com)