US cotton crop tipped as largest since 1994

The US cotton crop will likely be the biggest in 10 years, due to near ideal weather across the American cotton belt, and analysts said on Tuesday the cotton futures market has only partially priced in what is shaping up to be a bearish government crop report.
Analysts contacted by Reuters showed they expect the US cotton crop in 2004/05 to reach an average 18.878 million (480-lb) bales. In its July production report, USDA pegged the US cotton harvest at 18 million bales. It would be the largest cotton crop since 1994, when the US harvested 19.662 million bales.
"Were going to be swimming in cotton," Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, told Reuters in a phone interview.
Sharon Johnson, a cotton expert for Frank Schneider and Co Inc in Atlanta, said in a report that "those analysts using higher yields of 700 lbs or more producing a crop in the 19 million bale range would bump the US cotton crop up from the 5th largest to the 3rd largest with 1994 comfortably holding onto its number two spot."
Frank Weathersby of Affinity Trading said that, with the harvest set to start in a few weeks, there did not seem to be any problems confronting the crop.
Judy Ganes of J. Ganes Consulting, who pegged the crop at 18.5 million bales, said that ultimately the USDA may have to raise its estimate to more than 19 million bales, but the government would not do so in one monthly report.
Carl Anderson, an influential economist with Texas A&M University, said, if the USDA raises the crop above 19 million bales, it would be bearish for the cotton futures market.
He added that, if the USDA ups its forecast for world cotton production above 105 million bales, it would put added pressure on cotton prices at the New York Board of Trade. Last month, the US pegged world output at 104.73 million bales.
The benchmark December cotton contract was trading 0.25 cent lower at 45.50 cents a lb. The contract settled Monday at 45.75 cents.
The Reuters survey of analysts showed they expect the USDA to increase its forecast of world cotton output in 2004/05 to an average of 104.8 million bales, versus the USDAs prediction of 104.73 million last month.
Anderson said cotton crops in other countries like China, India and Uzbekistan were also in good shape.
Moss said there were lingering jitters among market players about how bearish the USDA report will be.
"Im still nervous about the report," he said.