Serj Panchuk
Exchange news. Rolling is currently observed. Funds are reserving positions of their December contract several months ahead; they are also cutting their long-term positions. Certified stocks at ICE stock exchange have increased and amount to 35,592 ths. bales as of November 4.
US current weather conditions (rain) are having a negative impact on yield. According to USDA, as of October 30, 29% of crop was in good condition, 42% of crop – in poor condition, and 55% of crop area was gathered (versus 43% last year).
According to ICAC, this season US cotton production has dropped due to drought, which had hit the crop. Global cotton production will continue growing in 2011-12 season mostly due to China, India, Pakistan, Australia, and a number of African countries.
Export of cotton from Australia and Brazil will reach the record. At the same time, economic stagnation will lower consumption and will have a negative impact on prices worldwide. Relation of stocks to consumption will rise to 46% by the end of 2011-12 season.
November report on cotton has already been issued, and there are no drastic changes concerning production forecast. To be more exact, production has been reconsidered from 124,2 to 123,9 (300 ths. bales less). At the same time, final stocks have been reconsidered towards rising from 54,82 to 54,95 (130 ths. bales more). Higher final stocks in the condition of lower production has happened due to less consumption and import, which mostly happened not due to “major countries”, but due to general stagnation.
Serj Panchuk
