US cotton crop seen falling

Torrential rains that swamped large swathes of the US Cotton Belt will likely prompt the government to cut US 2009/10 cotton production in next week's crop report, industry analysts said Friday. US cotton output is forecast at an average of 12.69 million (480-lb) bales, down from the forecast of 13 million bales in the US Agriculture Department's October report, according to a Reuters survey of cotton analysts.
USDA will release its November report at 8:30 am EST (1330 GMT) on Tuesday. "The deluge of rains since the middle of September across much of the mid-South has made this harvest the latest in more than a quarter century and is negatively impacting quality of the crop in the region," said a report by Gary Raines, chief economist at FC Stone Fibres and Textiles.
Arkansas and Mississippi have been particularly hard hit, said Carl Anderson, an influential economist who used to work with Texas A&M University. "I know it's serious," he said. Anderson estimated about 200,000 bales were likely lost in Arkansas and another 50,000 bales were hit in Mississippi. "Not only does too much rain on open bolls add to boll rot and yellowing of the cotton, but a driving rain can knock bolls to the ground, where they are unable to be picked up by pickers or strippers," said Raines.
Some analysts believe the USDA will not be done cutting the estimate for US cotton production given the lateness of the harvest and delays caused by the excessive rains. "It is very possible that due to the late harvest of this crop, the full impact of the crop deterioration may not be fully felt until the December (USDA) report," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
Raines said the delays raises the risk that cotton in the field will soon run into wintry conditions, "again impacting yield and quality. We look for production to decline in step, and quality to take a serious hit as a result." The analysts will also be taking a close look at estimates for China's 2009/10 cotton output, which has also been hit by poor weather.
"I will not be surprised to see a cut of 500,000 to 1.0 million bales in their estimate of Chinese production, plus increased consumption and imports," said Stevens. But unless there is official Chinese confirmation, Stevens doubts if the USDA would reduce the Chinese crop.