US cotton exports seen higher on robust demand, lower India output

The United States will export more cotton in the current crop year than the US Department of Agriculture (USDA) has forecast, raising the likelihood the agency will have to revise its projections on Thursday amid expectations for strong demand as well as lower output from top producer India, a Reuters poll showed.
US exports for the 2017/18 cotton crop will reach 14.90 million 480-lb bales, according to the median estimate of 12 traders and analysts surveyed by Reuters, versus the 14.50 million bales forecast by the USDA in its monthly crop demand and supply report in February. The USDA is scheduled to release its March crop supply/demand report on Thursday, March 8, at 12 pm EST (1700 GMT).
Long-term demand for US cotton remained strong amid an increase in consumption in countries like India and China, analysts said. Eight of the 12 analysts surveyed said they felt the federal agency would have to revise its forecasts upward, with the highest forecast for export estimates at 16.30 million bales.
"World demand is increasing, so India will use (likely) more of its crop domestically while China's production - consumption deficit should widen," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity. "Indian production estimates are moving lower, and all of this spells increased demand for US cotton for export."
A US regulatory mandate that truck firms switch to electronic logs (ELDs) from paper logs, which went into effect in December, might have prompted the federal agency to lower its forecasts for US exports in February, according to analysts. Weekly shipments have been lagging due to a truck shortage, said Ron Lee, general manager at McCleskey Cotton in Bronwood, Georgia.
"I think you will see shipments pick up very much in the near future. We have basically met their current sales estimate with 40 percent of the marketing year left," he said. Total US cotton committed for the current crop year stood at about 14.25 million bales at the end of week of Feb. 22, according to data on the USDA website. US cotton inventories will fall to 5.50 million bales, against USDA's expectations for 6 million bales, according to the median estimate.
However, higher ICE cotton prices and a slowdown in global economy could pose possible challenges to US cotton demand, analysts said. To be sure, US exports could lose some momentum from recent marketing-year highs in the coming weeks, as old crop prices extend above 80 cents per lb, said Charles Clack, agricultural commodity analyst at Rabobank.