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DTN Closing Cotton 07/10 13:36
Cotton Climbs Despite Larger Crop Forecast
Despite a higher projected 2026 U.S. crop, along with slightly increased
world carryout, the cotton market finished slightly higher Friday.
Keith Brown
DTN Contributing Cotton Analyst
Despite a higher projected 2026 U.S. crop, along with slightly increased
world carryout, the cotton market finished slightly higher Friday. Traders will
look to this afternoon's CFTC update for further influences.
From USDA's website we note:
"The July outlook for 2026/27 U.S. cotton forecasts higher production and
ending stocks, with beginning stocks, consumption, imports and exports
unchanged from last month. U.S. all-cotton production is raised 400,000 bales
to 13.7 million as planted area is estimated at 9.85 million acres based on the
June Acreage report, up 2 percent from last month. Harvested area also is
projected 2% higher at 7.54 million acres assuming a 10-year average
abandonment rate for all regions. The national average yield is raised 6 pounds
to 872 pounds per harvested acre, reflecting the increased area in the
Southeast and Delta and lower area in the Southwest in the June Acreage report.
With higher production and no changes to offtake, ending stocks are raised
400,000 bales to 4.1 million for an ending stocks-to-use ratio of 29.5 percent.
The projected season-average price is unchanged at 73 cents per pound. There
are no changes to supply and demand categories in the 2025/26 U.S. cotton
balance sheet this month. The 2025/26 season-average farm price is lowered half
a cent to 62.5 cents per pound.
"World cotton supply for 2026/27 is raised 300,000 bales as higher
production more than offsets a reduction in beginning stocks. The forecast for
global cotton production raised 1.2 million bales to 117.3 million with bigger
crops expected for Brazil, the United States, Turkey, and Central Asia.
"Consumption is raised slightly to 122.0 million bales with an increase in
Vietnam mill use slightly offset by a small reduction for Azerbaijan. Trade is
virtually unchanged from last month at 43.3 million bales. With the increase in
global supplies exceeding the growth in consumption, ending stocks for 2026/27
are increased slightly to 71.2 million bales, resulting in a stocks-to-use
ratio of 58.4 percent. For 2025/26, world production is lowered by 750,000
bales following a likely reduction for Brazil. Global consumption is reduced
modestly to 120.0 million bales as a reduction for Pakistan more than offsets
an increase for Vietnam, with small changes elsewhere. Exports are raised 1
percent, primarily on higher shipments by Brazil, and small changes for a few
other countries. Ending stocks are reduced by about 900,000 bales, mostly due
to the smaller Brazilian crop, lowering the stocks-to-use ratio to 63.1
percent."
Also, Friday at 3:30 p.m., the CFTC will update its Commitment of Traders
data. Last week, the funds bought 6,400 positions, shrinking their net-long
carry to 31,985 contracts.
The most current U.S. Drought Monitor now shows that 55% of the U.S. cotton
area is in drought conditions. That reading compares to the previous 56% versus
its top peak of 98% drought earlier in the year. With that, the 6- to 10-day
weather forecast (July 15-19) shows near-normal to above-normal temperatures
for West Texas, while the Delta and the Southeast will experience above-normal
to much above-normal readings. Rainwise, much of the breadth of the U.S. Cotton
Belt should see slightly above-normal chances for precipitation opportunities.
Crude oil was lower Friday, but was on track for weekly gains as renewed
U.S.-Iran fighting disrupted shipping in the Strait of Hormuz, stoking
concerns over supply disruptions. President Trump said Friday that the United
States and Iran have agreed to continue peace talks, but emphasized that "in no
uncertain terms, that the ceasefire is over."
For Friday, December closed at 81.54 cents, up 93 points; March 2027
finished at 82.91 cents, plus 94 points; and July 2027 settled 83.12 cents, up
78 points. Friday's estimated volume was 52,587 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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