Cotton futures dip as bearish USDA crop report continues to weigh


Forexpros – Cotton prices came under pressure for a third day on Monday, as Friday’s bearish plantings report from the U.S. Department of Agriculture continued to weigh on the fiber.

On the ICE Futures U.S. Exchange, cotton futures for May delivery traded at USD0.9316 a pound during European afternoon trade, shedding 0.39%.

It earlier fell by as much as 0.55% to trade at a session low of USD0.9308 a pound.

The USDA said in its Prospective Plantings report on Friday that it expects U.S. farmers to plant 13.155 million acres with cotton this year, down 11% from last year but above market expectations for 12.85 million acres.

In early February, the National Cotton Council, an industry group, had pegged U.S. 2012 cotton sowings at 13.63 million acres, down 7.4% from 2011 cotton plantings of 14.72 million acres.

The bearish USDA sowings report prompted Wall Street investment bank Goldman Sachs to lower its 12-month average cotton price forecast to USD0.7500 a pound, almost 20% below current prices.

“Large cotton acreage suggests that cotton prices will decline further into the autumn,” Goldman said in a report earlier.

However, losses were limited as other market analysts doubted the actual plantings number as the survey was done on March 1 and would likely be subject to revisions with spring still to unfold.

Other market participants speculated that cotton plantings were already on the decline, as cotton producers shifted some intended acres to corn and soybeans to take advantage of higher prices.

In Texas, the largest cotton-growing state in the U.S., farmers planted 6.813 million acres, down from 7.570 million last year, the USDA said. Georgia, the second-largest grower, will plant about 1.4 million acres, down from 1.6 million in 2011.

The agency added that cotton acres are projected lower for every cotton-producing state in the U.S. except Missouri, which is unchanged from last year, and South Carolina, where acreage are expected to increase by 12%.

The USDA’s annual planted acreage report is released June 30, which will set the stage for the upcoming 2012-13 marketing year, which begins in August 2012 and ends in July 2013.

The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.

Elsewhere, on the ICE Futures Exchange, coffee futures for May delivery rose 0.75% to trade at USD1.8370 a pound, while sugar futures for May delivery dropped 0.65% to trade at USD0.2454 a pound.