The US Department of Agriculture will release its first estimates for the 2004/05 cotton crop on Wednesday, and though analysts said they look for a healthy, though not unusually large crop, they think it will be inflated by an overly optimistic plantings assumption.
"This is the preliminary cotton production figure, the first look at what the USDA thinks production will be," said Jobe Moss of brokers and merchants MCM Inc. in Lubbock, Texas.
The USDA will release the report on May 12 at 0830 EDT/1230 GMT.
The question on everyone's mind will be what plantings intention acreage the USDA uses to come up with the rest of its forecasts, including domestic use, exports, and ending stocks.
A Reuters survey of cotton market observers produced an average forecast for US production of 17.88 million 480-lb bales for the 2004 crop year, down from 2003 cotton production of 18.22 million bales.
The crop year extends from August 1, 2004, to July 31, 2005.
Estimates varied from a high at 18.70 million bales to a low at 16.92 million, partly because some respondents were forecasting what they expect the USDA data will show, while others calculated their own best estimates.
At issue in this report is the USDA's plantings intention estimate of 14.4 million acres released on March 30.
"I think that number's fluid. But, the planting intentions that came out March 30 just floored everybody, because nobody thought it would be that high," said Moss.
Analysts said the survey for plantings was conducted at the end of February and first of March. Meanwhile, in mid-March soybean futures on the Chicago Board of Trade rocketed to 15-1/2 year highs and corn prices kept pace with the surge.
As a result, analysts had predicted that fewer acres would be devoted to cotton and would instead be turned over to soybean and corn crops.
For example, one analyst pointed out, soybeans shot from $6.80 up to $7.90 a bushel in March, while cotton tumbled from 68 to 64 cents a lb. in the month.
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