Cotton prices remain range-bound while supply rises, says Cotton Incorporated

(Image source: Cotton Incorporated) According to the February issue of Cotton Incorporated's Monthly Economic Letter, cotton prices remained range-bound over the last month. The US-based organization reports that in January, prices for the March futures contract on the New York exchange traded between 93 and 100 US cents/lb. Over the same time period, values for the A Index ranged between 99 and 104 US cents/lb. After the release of this month's USDA (US Department of Agriculture) report, March futures moved lower, closing near 90 cents/lb. It is also said that the USDA report features revisions to historical figures for several Asian countries. The most significant updates were for India, but a series of minor revisions were also made for central Asian nations. According to the USDA report being quoted, the Indian production figure for 2009/10 increased by 800,000 bales, and the Indian production figure for 2010/11 increased by 1.0 million bales. Estimates for historic Indian mill use also rose, with 2010/11 consumption increasing by 350,000 bales. The net effect of these changes was that Indian beginning stocks for the current 2011/12 crop year increased by 1.5 million bales. This increase in Indian supply was a major contributor to the 1.6 million bale increase in estimated 2011/12 world beginning stocks in the February report, says Cotton Incorporated. Other changes to 2011/12 figures included a 505,000 bale addition to the global production figure, with the largest country-level revision being for Pakistan (+400,000 bales). The global consumption figure for 2011/12 was reduced by 285,000 bales, with the largest country-level revisions being for Thailand (-100,000 bales) and the US (-100,000 bales). Higher estimates for world beginning stocks and production, together with a decrease in consumption, led February's forecast for 2011/12 ending stocks to increase 2.4 million bales relative to last month. With these revisions, Cotton Incorporated says expectations are that ending stocks will increase 13.8 million bales this crop year, representing the largest addition to world ending stocks since 1984/85. Source: ATA Editorial Team (KY)