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The US Department of Agriculture released its monthly November production and supply/demand report on Thursday. The following are the key points for cotton: 2006/07 US crop - 21.30 million (480-lb) bales, from 20.66 million bales last month.
2006/07 US cotton exports - 16.20 million bales from 16 million bales last month. 2006/07 world production - 115.72 million bales from 116.19 million bales last month. 2006/07 world consumption - 120.88 million bales from 120.98 million bales in October.
2006/07 world ending stocks - 51.05 million bales from 52.26 million bales in last month's report. 2006/07 China production - 30 million bales from 29 million bales last month. 2006/07 China cotton imports - 17.50 million bales from 18.5 million bales in the October report.
2006/07 China consumption - 50 million bales from 50 million bales in the October data. 2006/07 China ending stocks - 15.14 million bales, from last month's 15.14 million. Mike Stevens, SFS Futures in Mandeville, Louisiana: "US production was raised more than anticipated. However, world ending stocks are lowered. So based on that, the report is not as bearish as projected.
"It is confusing to me to try and justify the US exports being raised 200,000 (bales) when Chinese imports are reduced by a million bales as a direct result of a widely expected increase of the Chinese crop by a million bales. "There's something that's just not quite adding up." Alan Feild, iamhedged.com in Memphis, Tennessee
"Certainly the crop numbers aren't nearly as bearish as the cotton market expected. You have to take the US crop and throw those out the window. That's old information. What was amazing is that world production fell and world consumption was barely lower, reminding us that world consumption continues to outpace and increase the gap of world production.
"Now, the market has the job of figuring out just how US and world ending stocks are going to stay at current levels while competing crop for acres rally to much higher levels. This is bullish (for cotton). The corn and soybean numbers were bullish, more bullish than expected. So now the cotton market's job immediately is to start buying acres, not only in the US, but in China. Just how many cotton acres will be planted next year when there are much much more profitable crops around the world?"
The New York Board of Trade's benchmark December cotton contract finished Thursday 0.37 cent lower at 49.52 cents per lb, after rallying to 50.70, its highest level since October 30. The session low was 49.45 cents. March lost 0.47 to 53.60 cents.

Copyright Reuters, 2006

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