Cotton prices drops as projections rise

Global cotton production for the coming year is expected to drop 4 percent, according to estimates by the US Department of Agriculture.

The projected decline is attributed to a significant reduction in Brazil, where the crop for the 2012-13 year is expected to fall by fully one-third.

Record soybean and corn prices, disease outbreak and erratic precipitation are expected to lower the crop in the central Brazilian states of Bahia and Mato Grosso, which together account for more than 80 percent of Brazil’s total annual cotton production, according to Southeast Farm Press.

In the US, production is expected to be slightly more than 17 million bales, which represents a 2 percent increase from the previous month’s USDA estimate and is 11 percent higher than the previous year’s crop, the publication added.

Worldwide, 2012-13 cotton production is estimated at nearly 120 million bales.

Global cotton stocks are expected to be significantly higher this year than last, the USDA also reported.

Last week, the Agriculture Department said global stockpiles of cotton will be 82.45 million bales in the year ending July 31, 18 percent more than a year earlier.

Not surprisingly, futures prices have dropped in recent weeks.

Cotton for July delivery was down to around 85.5 cents a pound as of Tuesday, off about 2.5 percent since the start of the month.

“We’ve just got too much supply in the world,” Keith Brown, the president of Keith Brown & Co., a broker in Moultrie, Ga., told Bloomberg. “The market’s coming to its fundamental senses and saying, ‘Why am I up here?’”

2 thoughts on “Cotton prices drops as projections rise

  1. Hiya bud,
    It’s a given that my memory is not the best due to the illness I am dealing with along with age-related memory loss; but up until a decade or so ago (I think), peanuts were the primary crop around here with secondary crops of soybeans and feed corn. The peanuts are now mostly Georgia grown. Dang shame, IMHO, as the VA peanuts were superior, much larger while the nuts in GA are those small round ones (Spanish nuts I think)?. Now cotton has become the primary crop here, still with soy and corn as the secondary crops. The corn is actually tasty if you catch it real young (that’s snagging it out of a field like a kid) but only for a week or so. After that, it’s just too tough and I don’t even know how cattle can stand it.

    • Yes, there’s nothing like fresh corn; I suppose cattle will eat just about anything. If cotton prices continue at relatively low prices, don’t be surprised to see other crops take their place. Of course, the corn is somewhat of an artificial market, thanks to the push for ethanol for fuel. Personally, I’d like to see more of the tasty peanuts.

      Thanks for the note – sounds to me like your memory is doing just fine.

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