Market Update: Cotton Futures See Declines Amid USDA Report

Cotton futures have dropped by 60 to 70 points on Friday, as many traders feel the USDA’s production cut did not meet their expectations. External markets are showing mixed trends, with crude oil down by 53 cents per barrel and the US dollar index falling by 133 points.

USDA Reports Significant Cotton Ginnings

The National Agricultural Statistics Service (NASS) released its bi-monthly Cotton Ginnings report, revealing that 1.146 million running bales (RB) of cotton were ginned by October 1. This marks an increase of 473,933 RB since mid-September and is the highest total for this time of year since 2019.

Yield Cuts and Production Adjustments

In its monthly Crop Production report, NASS cut the cotton yield estimate by 18 pounds per acre, bringing it down to 789 pounds. This adjustment was largely due to a significant 176-pound decrease in Georgia’s yield, while Texas experienced an increase of 38 pounds. Consequently, the total production is now forecasted at 14.2 million bales, a reduction of 310,000 bales. NASS indicated that the full effects from Hurricane Helene, which made landfall recently, may still be reflected in future reports. Furthermore, a decrease of 100,000 bales in domestic use and 300,000 fewer forecasted exports means that ending stocks for 2024/25 have been revised upward by 100,000 bales to 4.1 million.

Global Cotton Stocks Show Modest Decline

On the global front, the projected cotton stocks for 2024/25 were lowered by 160,000 bales to 76.33 million, primarily due to a reduced carryover.

Market Transactions and Price Adjustments

The Seam reported 1,000 bales of online sales on October 10, averaging 74.40 cents per pound. ICE cotton stocks remained stable on Thursday, reporting 265 bales of certified stocks. The Cotlook A Index held steady at 84.00 cents per pound on October 9. Additionally, the USDA Adjusted World Price (AWP) was reduced further by 40 points to 60.41 cents per pound, valid for the upcoming week.

Current Cotton Futures Prices

Mar 25 Cotton is trading at 74.08, down 67 points.

May 25 Cotton is at 75.44, also down 67 points.

Jul 25 Cotton is recorded at 76.27, down 67 points.

On the date of publication, Austin Schroeder did not hold any positions, directly or indirectly, in the securities mentioned in this article. All information in this article is for informational purposes only. For more details, please view the Barchart Disclosure Policy
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