What is in this article?:
- 2010/2011 Pima crop sold out.
- One-third of the expected new Pima crop production has already been committed for export.
- Forward contract prices 2.25 per pound, already up from $1.70 per pound starting point at the end of last October.
High prices likely will remain
Tight supply and high prices are likely to remain for the 2011-2012 season and into 2012. This will happen unless Egypt and China are able to increase production significantly. Early reports indicate Egypt might increase by 30 percent to 35 percent However, because of recent political developments, will there be more pressure to produce food crops?
Production increases in China are anyone’s guess, but any increase would probably be small. Even with an increase of 35 percent in worldwide ELS production, there will be tight supplies going into the 2012 year. This means continued strong prices.
On a more immediate note, the latest cotton production report by the USDA–NASS indicates the U.S. production estimate for American Pima during this marketing/crop year at approximately 497,500 bales.
Also this month, the USDA – Foreign Agricultural Service (FAS) stated in the export sales report on Feb, 25, that export sales had reached a level of 497,700 bales. This is virtually the same level of the previously reported production estimate.
From the export sales report, a total of 278,900 bales have already been exported and 218,900 bales are yet to be exported.
The USDA – World Agricultural Outlook Board (WAOB) also released its U.S. Supply and Use Estimate for U.S. cotton. In that report, beginning stocks are estimated to be 18,000 bales. Added to the production estimate, this places total supply of American Pima at approximately 516,000 bales. However, the latest USDA–WAOB estimate only predicts that 470,000 bales will be exported this year and that 35,000 bales will be used domestically for a total consumption estimate of 505,000 bales. Allowing for the additional 10,000 bales of unaccounted stocks, ending stocks for the 2010-2011 crop are forecast to be 20,000 bales.
While the U.S. is still about two months away from the prime planting season, industry forecasts are predicting that plantings could result in a crop that could be about 850,000–900,000 bales. While this number represents a potential production record for American Pima cotton (the previous record was set in the 2007-2008 crop at 852,000 bales), supply of that cotton is already tightening for a number of reasons.