Sunday, March 10, 2013 - NEW YORK
The US government on Friday cut its forecast of global cotton inventory for the marketing year to end-July due to expectations of higher demand as China, home to the world's No. 1 textile industry, continues to bulk up its strategic stockpile of fiber.
In a monthly crop report, the US Department of Agriculture reduced its estimate for the surplus to 81.74 million bales, down 120,000 bales from last month's forecast. It was the second reduction since the season started on Aug. 1. If the new estimate holds true, however, the carryover into next season would still be the highest since USDA records began in 1966.
Knight Capital cotton specialist Sharon Johnson described the report as "friendly, if not bullish", noting the first sizeable increase in consumption for the marketing year and rising exports.
That will help ease concerns about competition from lower-priced polyester and weakening retail demand due to a sluggish global economy. "This month's 2012/13 world cotton estimates show higher production, consumption and trade, with ending stocks reduced marginally," the report said.
Prices remained in positive territory after the report's release, but failed to hold 10-month highs reached in earlier trade as some investors used the data as a trigger to lock in profits. The market also hit technical resistance.
The most-active May cotton contract on ICE Futures US settled up 0.38 cent, or 0.4 percent, at 86.88 cents a lb. Prices have rallied nearly 15 percent year-to-date as speculators have piled in, betting on big returns after two years of falling prices. Beijing's buying spree and expectations of lower crops next year have played into those bullish bets.
(Source: International The News)