Cotton is one of just a few remaining commodities that have bucked the bullish trend so far, mainly because sharp yield increases were able to keep output at par with rising demand. But the cotton market seems to have reached an inflection point at which it is becoming increasingly difficult for production to keep up with consumption, particularly in view of strong competing crops that are likely to lure acreage away from cotton.
USDA Chief Economist Keith Collins added further credence to this theme today as he told the House Agriculture Committee during a hearing on farm-sector trends that in his view cotton and corn acreage would slip to 10 mio acres and 87 mio acres, respectively, while soybeans and wheat would see higher plantings of 70 mio and 64 mio acres, respectively.
Collins further predicted that US cotton stocks would drop from 6.4 mio bales in 2007/08 to just 4.0 mio bales in 2008/09, while corn inventories would also fall quite considerably, from 1'997 mio bushels in 2007/08 to just 1'157 mio bushels in 2008/09.
Even soybeans should see a marginal drop in ending stocks despite the higher acreage, while wheat is the only one expected to show a rebuilding of inventories in the 2008/09 season.
marketing@alchempro.com
