Cotton Market weekly

Cotton futures on the New York Board of Trade settled at a four-year high Thursday on a flood of technical buying by speculators and funds. The December cotton contract gained 2.26 cents to close at 80.94. Likewise, the spot market seemed to take its cue from the futures market as producers in Texas, Oklahoma and Kansas sold 37,805 bales online that day at an average price of 65.13 cents per pound.

Analysts said cotton's next move will depend greatly on what happens in other commodity markets, but the industry also will take its cue from any new news that might spring from USDA'S annual Outlook Forum at the end of the week. Market observers were looking closely for presentations concerning crop prospects in the upcoming 2008-09 marketing year, especially those regarding prospective plantings and production in the United States.

One of those reports, released early Friday morning, pegged planted acres for U.S. cotton in 2008-09 at 9.5 million and production at 15 million bales. Last year's U.S. cotton acreage totaled 10.8 million, and production has been estimated at 19.03 million bales.

"We'll take any numbers that come out of the outlook meeting and look for clues as to what the government's potential plantings report might contain when it's released on March 31," an analyst explained.

The National Cotton Council's survey of U. S. farmers' intentions released on Feb. 8 showed plantings of 9.55 million acres and anticipated production of 15.38 million bales. The cotton crops in the Delta and in California are expected to shrink well below 2007-08 levels while crops in Texas, Oklahoma, and Kansas should be close to the same size, the Council said.

"If as much cotton is planted in Texas, Oklahoma, and Kansas as we now are expecting, the three states could produce roughly 52 percent of the U.S. crop in the upcoming year," an analyst said. In global news, the world's fifth largest cotton exporter raised its forecast for production by 13 percent. Australian cotton output may be 532,788 bales in 2007-08, the Australian Bureau of Agricultural and Resource Economics said in a report released this week. That compared with its December estimate of 473,079 bales and last year's crop of 1.2 million bales. Rain in many areas of Australia encouraged farmers to plant cotton in a larger area than forecast, the bureau said. Total output still will fall to a 25-year low after dry weather earlier in the growing season limited the amount of irrigation water available.

Meanwhile, USDA reported net export sales of U.S. cotton in the week ended Feb. 14 totaled 483,800 bales, up 225 percent from the previous week and the four-week average. China was the featured buyer at 276,600 bales. Export shipments for the week totaled 207,300 bales, an increase of 2 percent from the previous week and 15 percent better than the four-week average. China, Mexico and Turkey were the primary destinations.

On the spot cotton scene, online trading by producers in Texas, Oklahoma, and Kansas totaled 67,852 bales in the week ended Feb. 21 compared to 38,764 bales the previous week. Average daily prices received by producers ranged from 49.39 to 65.13 cents per pound versus 55.00 to 62.89 cents per pound one week earlier.