A Better Outlook in the Cotton Market

A Better Outlook in the Cotton Market

Cotton Cotton

July 14, 2016

The USDA says China's cotton mills are aggressively buying from the country's reserves, suggesting they're using more cotton than previously thought. 

That led the USDA to lower global ending stocks for the 2015–16 marketing year and the 2016–17 marketing year in it's recent supply and demand report. At the same time, U.S. cotton acreage is up 16% and production is forecast at almost three million bales more than last year. That combination led the organization to increase its export forecast by one million bales.

Cotton futures prices spiked higher on the forecast, rising above 70 cents a pound for the first time since 2014. Shortly after the USDA's report on Tuesday, National Cotton Council's Vice President Reece Langley said, "For 2016 there is some optimism. Prices have actually been straightening a little bit." 

Like corn and soybean producers in the midwest, cotton growers have been struggling with a prolonged period of low prices, prompting USDA to create a cost-share program to help the industry. 

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