The cotton adjustments in the USDA report are all within the expected range of market participants

by:JIYALI     2021-08-01
On Tuesday morning, the U.S. Department of Agriculture released a report on production and supply and demand forecasts for December. Most of the adjustments were within market expectations. The report has a neutral and bearish impact on the market.  SFS Futures Company analyst Mike Stevens said: I did not see any surprising news in the report. The report basically made a minor correction.   The U.S. data is basically unadjusted, and even the upward adjustment is within analysts’ expectations.   US cotton production was raised to 18.99 million bales, up from 18.86 million bales reported in November. Analysts expected an average of 18.98 million bales.   The domestic consumption has not been adjusted, and remains at 4.6 million bales, which is in line with analysts’ expectations.   Exports were unadjusted at 16.2 million bales, while analysts expected the intermediate data to drop to 16.16 million bales.   World supply and demand data is also very close to analysts’ expectations.   UDSA lowered its world production to 1.1876 one bale, lower than the 11936 million bale reported in November.   World ending stocks were raised to 55.29 million bales, higher than the 54.81 million bales reported in November.   First Building analyst Sharon Johnson said that the world ending inventory is raised by 480,000 packages, which is not a big adjustment.   The cotton production of India, the world’s second largest cotton producer, has been raised to 24 million bales, up from 23.5 million bales in November. This is an adjustment based on the report of the U.S. Agricultural Counsellor. India’s exports were also raised to 5.3 million bales, up from 5 million bales in November. India's ending inventory has been adjusted accordingly, from 6.76 million bales to 7.06 million bales.   China’s cotton production has not been adjusted. Some analysts expect that there will be adjustments in the future when some reliable data are available. China’s imports have not been adjusted, and exports have been raised to 80,000 bales, up from 50,000 bales in November. China's ending stocks, the world's largest cotton producer, were lowered to 17.14 million bales, down from 17.16 million bales in November.   Pakistan’s cotton production has been lowered, and the USDA estimated production at 8.5 million bales, lower than the 9.75 million bales reported in November. Domestic consumption was reduced to 12 million bales, down from 13 million bales in November, and exports were reduced from 250,000 bales to 150,000 bales.  Johnson said, we think that the Ministry of Agriculture will definitely reduce Pakistan's output, but we did not expect to reduce it by 1.25 million bales.   Flanagan Trading Company President John Flanagan said that the market’s response may be silent or unresponsive, and the bulls’ response to the food market may bring some support to the market. The report is considered to be neutral and bearish, and the world ending inventory is raised by 480,000 bales. A small adjustment in US data should not affect the market.   Now the cotton market will follow the grain market (grain production and supply and demand reports), while focusing on planting next year. The market will also pay attention to the Fed's actions today.
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