Ag Market Network Teleconference:
The next Ag Market Network Teleconference will be held on Friday, March 10, 2017 at 7:30 a.m CDT. A panel of cotton experts will discuss global cotton production, crop conditions, domestic demand, exports, and government policy.
The teleconference number is 1-712-775-7085 and the code to enter is 969119 to listen by phone. During the program you can submit questions for the panel through Facebook (AgMarketNetwork) or Twitter (@AgMarketNetwork).
You can also listen to an archived recording of the teleconference at www.AgMarketNetwork.net.
Cotton Market Update:
Cotton acres are expected to increase in 2017. The magnitude of the increase however is still being debated. The results of the National Cotton Council’s annual acreage survey taken from mid-December to mid-January indicated 2017 cotton acres would increase to 11.01 million acres–up from 10.07 in 2016.
During the National Cotton Council’s acreage survey period, December 2017 cotton futures prices averaged 70.07 cents per pound. Since mid-January cotton prices have continued to trend higher. For the month of March, the average settlement price for the December contract has been 75.11 cents.
December 2017 Cotton Futures
Given the continued increase seen in cotton prices, 2017 acreage estimates are also increasing. At the recent Agricultural Outlook Forum, USDA economists expect 2017 planted acreage to reach 11.5 million acres. This would be the highest planted acreage since 2012.
Strong export demand has offered support to cotton prices during the 2016/17 marketing year. As of February 23, export sales are 4.7 million bales ahead of last year’s pace and have already far surpassed the total sales volume for entire 2015/16 marketing year. Higher 2016 sales to China, Vietnam and Indonesia are a key part of the year-over-year increase in sales. In what might be considered unexpected business, the U.S. has sold 406,306 bales to India in 16/17 and 786,248 bales to Pakistan. Combined upland sales to the two countries currently stand at 1,192,554 running bales.
Total export sales for the 2016/17 marketing year are now almost 11.9 million statistical bales, of which 6.6 million bales have been shipped. This leaves just 811,304 bales to sell over the remaining 22 weeks of the 2016 marketing year. Sales need to average 36,877 bales per week to reach the USDA’s February export projection of 12.7 million bales. Shipments need to average 268,384 bales per week for the remainder of the marketing year. Shipments have been in excess of 337,000 bales for each of the past five weeks with marketing year high shipments of 479,294 bales four weeks ago.
The rapid pace of export sales may indicate further increases in USDA’s export estimate are on the horizon. In February the USDA increased U.S. exports by 200,000 bales to 12.7 million. February was the third consecutive month in which USDA had increased its’ export projection. Many in the cotton industry currently believe final 2016/17 exports will exceed 13 million bales, with some private estimates as high as 13.5 million bales. If true, ending stocks for the current marketing year could drop to 4 million bales, compared to the current estimate of 4.8 million.
The next release of the USDA supply and demand estimates is Thursday, March 9, 2017.