Cotton industry analysts said on Wednesday there is deep uncertainty whether the pace of global economic recovery would boost fibre demand when a government crop report is handed out this week. The US Agriculture Department's monthly supply/demand report is due to be released on Friday at 8:30 am EDT (1230 GMT).
The world economy "is stabilising" but there are question marks whether the recovery would lead to a rise in cotton consumption, said Carl Anderson, an influential economist closely followed by the industry. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said that as usual, the supply side will take a close look at crops in the United States and No 1 consumer China.
There should be "little change to demand for the moment given the uncertain economic view through the remainder of this calendar year," Johnson said in a report. Last month, the USDA forecast world 2009/10 cotton at 105.06 million (480-lb) bales, down from the preceding month's 105.87 million bales. Anderson said the USDA will likely peg the US 2009/10 cotton crop at 13.1 million bales. But he said that number will probably go down in the months ahead because of excessively wet conditions in the US Delta while cool weather hindered the development of the crop in Texas.
Johnson pegged the US cotton crop at 13.3 million bales, while John Flanagan of brokers Flanagan Trading Corp forecast it at 13.18 million bales. In last month's USDA supply data, the US cotton harvest was estimated at 13.44 million bales. "There's a lot of doubts on the (size of the) US crop," Anderson said.
"Four straight weeks of deteriorating crop ratings has most observers peeling at least 300,000 bales off the September production estimates," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. "Damage reports from the Delta and Midsouth go far beyond conjecture or speculation. These reductions should flow through directly to the ending stocks number," he concluded.
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