DTN Closing Cotton            05/12 13:32

   Cotton Eases Lower Tuesday

   After seeing neutral to friendly supply-demand updates, the cotton market 
ended lower today.

Keith Brown
DTN Contributing Cotton Analyst

   After seeing neutral to friendly supply-demand updates, the cotton market 
ended lower today. Traders will now focus on this Thursday's weekly export 
sales and the Trump/Xi meeting.

   USDA issued its May WASDE projections with the following data:

   "The first forecast of the 2026/27 U.S. cotton balance sheet shows lower 
production and ending stocks, and higher exports and beginning stocks compared 
to 2025/26, with consumption unchanged. Planted area is projected at 9.64 
million acres based on the March 31 Prospective Plantings report. Harvested 
area is forecast to be 7.38 million acres for an abandonment rate of about 24 
percent, approximately equal to the 10-year average. The 2026/27 national 
average yield is projected at 866 pounds per harvested acre based on regionally 
weighted 5-year averages, slightly above last year's 852 pounds. Production is 
projected to be 13.30 million bales, 600,000 below the 13.90 million bales 
produced in 2025/26. Exports are projected 300,000 bales higher at 12.30 
million due to higher global demand and stocks are drawn down. As a result, 
ending stocks are forecast to be 500,000 bales lower at 3.90 million, for an 
ending stocks-to-use ratio of 28.1 percent. The projected season-average price 
for 2026/27 is 73 cents per pound. U.S. all-cotton production for 2025/26 is 
lowered 21,000 bales to 13.90 million. There are no other changes to supply and 
demand categories in the 2025/26 U.S. cotton balance sheet this month. The 
season-average farm price forecast is raised 2 cents to 63 cents per pound 
reflecting recent strength in cotton futures. World supply for 2026/27 is down 
2 percent from 2025/26 as global production is projected 6.6 million bales 
lower, more than offsetting the 2.8-million-bale increase in beginning stocks. 
World consumption is projected to increase 1 percent to 121.7 million bales led 
by increases for China, India, Bangladesh, Egypt, Pakistan, and Vietnam (up 
collectively 1.5 million bales). Global trade is expected to be 1 percent lower 
at 43.4 million bales as reduced imports by India more than offset increases 
for Pakistan, China, Vietnam, and other countries. Ending stocks are down 7 
percent from 2025/26 at 71.8 million bales as Australia, Brazil and the United 
States drawdown stocks to support exports given smaller crops, and India and 
China draw down stocks to support consumption. The 2025/26 world balance sheet 
is revised to show higher production, consumption, and beginning and ending 
stocks, with trade marginally increased. The global production estimate is 
raised nearly 1 percent to 122.6 million bales as an almost 900,000-bale 
increase for Uzbekistan is partially offset by a reduction for Argentina. 
Consumption is increased by almost 1 percent as mill use in Uzbekistan is 
raised 1 million bales, reflecting its much larger crop, and consumption in 
China is revised 500,000 bales higher. Partially offsetting reductions are 
expected for Pakistan and Vietnam, with small adjustments for several 
countries. Ending stocks are forecast to increase by around 220,000 bales as 
the increases in beginning stocks and production exceed that for consumption. 
The ending stocks-use ratio is down slightly to 64.3 percent."

   Starting Wednesday, the Trump/Xi trade meeting will take place in Beijing. 
The two sides have much to discuss including tariffs, Taiwan, Iran and rare 
earths.

   On Thursday at 8:30 a.m. EDT, USDA will release its latest export sales 
numbers. Last week saw net sales of 123,000 bales, off some 24% weekly, and 
shipments of 327,000 bales, down 15% week over week.

   For Tuesday, July closed at 86.32 cents, down 145 points; December closed at 
86.27 cents, minus 112 points; and March 2027 finished at 86.78 cents, 116 
points lower. Tuesday's estimated volume was 100,160 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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