New York cotton down on USDA crop data

Cotton futures finished lower on Friday after USDA estimated higher production world-wide, but suspected consumer buying trimmed losses in fibre contracts, analysts said. The benchmark May contract on ICE Futures US declined 0.76 cent to finish at 88.80 cents per lb, dealing from 88.25 to 90.46 cents. For the week, the market was up 0.64 percent.
Volume traded Friday reached almost 22,000 lots, about 10 percent under the 30-day norm, Thomson Reuters data showed. The catalyst for the weakness was the monthly supply/demand report by the US Agriculture Department. USDA upped world 2011/12 cotton production to 123.64 million (480-lb) bales, from 123.34 million, reduced world consumption to 108.72 million bales from 109.71 million, and raised world ending stocks to 62.32 million from 60.77 million bales.
"The USDA report can't get (any) more bearish. It's more production and less consumption. We've got an oversupply," said Mike Stevens, an independent cotton analyst in Louisiana. Despite the bearish numbers though, he said suspected trade and consumer buying emerged at the lows.
The pattern over the past few weeks has been that every time cotton prices dip below 88 cents, mill buying comes out and prevents further losses in cotton futures, dealers said. Over the last few months, USDA has been cutting world cotton output and use, causing stocks to expand.
"On the surface, (the) numbers continue their bearish theme and futures are selling off," said Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures. But she pointed out that the expansion in ending stocks was caused mainly by China and "those stocks will not be available to any one, external or internal, until deemed necessary by Beijing and only then to their mills in a small way."
The market did not react to news that India would allow cotton cleared by customs before March 4 to be exported, with traders saying the decision had been expected by the market. India is the world's No 2 cotton producer and the biggest exporter after the United States. New Delhi had imposed a ban on cotton exports last Monday. The decision was challenged by India's farm minister and the Indian ministers meeting did not immediately decide on the issue.