By Clint Thompson
Last week’s release from the U.S. Department of Agriculture showing cotton supply/demand numbers and projections paints a grim picture for farmers in the Southeast.
Don Shurley, a retired cotton economist and Professor Emeritus of Cotton Economics at the University of Georgia, said the remaining outlook for the old cotton crop and near term outlook for the new crop got dimmer last week.
Prices remain dismal for cotton farmers. New crop Dec. futures have fallen back to 59 to 60 cents per pound. Shurley price direction will depend largely on demand and exports and U.S. crop size and condition.
Some of the report’s highlights include:
The 2020 crop is still projected at 19.5 million bales.
U.S. exports for the 2019 crop year remain at 15 million bales.
U.S. mill use for the ’19 crop year was lowered 200,000 bales.
U.S. mill use for the ’20 crop year was also revised downward by 100,000 bales.
World demand for the ’19 crop year was revised down by 2.35 million bales to only 102.65 million bales, which is 17% less than 2018 and the lowest since 2003.
World use is expected to rebound for the ’20 crop year but the USDA report lowered that increase by 2 million bales.
Ending stocks for the ’20 crop year are projected to top 104 million bales, almost 5 million bales higher than for ’19 and the largest stocks since 2014 and second highest on record.
“(The) report suggests that rebound in demand/use from the coronavirus pandemic may be slower than earlier projected,” Shurley said. “I also wonder what can be done to invigorate the US textile mill industry so we are not as dependent on exports. Large stocks in China used to be the problem. Stocks in the ROW (Rest of the World) are now the problem.”
The first USDA estimate of actual acres planted will be released on June 30.