Cotton: record US crop expected in USDA data

The United States is on track to harvest a record cotton crop and the world harvest is equally large, but the trade is wondering what it would take to sell the fibre this season, analysts said Wednesday. The trade must contend with gyrating currencies and crude oil prices, harvest weather in the US, the question of how much cotton China will import, and whether prices would need to drop further to stoke demand, they said.
The cotton market is juggling all those factors before Friday's release of the US Department of Agriculture monthly supply/demand report.
"We're really in uncharted territory with all the unknowns we are dealing with," Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, Georgia, said in a phone interview.
"We're still looking for the answers," Frank Weathersby of brokers Affinity Trading in Florida said when asked about the uncertainties facing the cotton market.
He said US cotton producers will be able to move the cotton, but "we just don't know" the price at which it will be bought.
On Wednesday, the December cotton contract was up 0.23 cent at 44.27 cents a lb at 11:20 am EST (1620 GMT).
A survey of industry analysts by Reuters showed they expect the USDA to peg the US cotton harvest to hit an average of 21.56 million (480-lb) bales, up a touch from the October USDA estimate of 21.54 million.
The US cotton crop record is 20.5 million bales, set in 2001/02.
Mike Stevens, an analyst for SFS Futures in Mandeville, Louisiana, believes the estimate for world cotton output may go down slightly to 109 million bales from last month's 109.67 million.
Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said there are also expectations the USDA would raise its estimate for Indian cotton output. Last month, the government forecast production at 14.2 million bales.
Most of the trade expects a reduction in the crop in China, which the USDA said last month should hit 29.5 million bales. The Asian nation is the world's biggest producer and consumer of cotton.