Cotton Prices Outlook, June 18 - Cotton prices are holding near the bottom of a 5-month trading range, well below March's record high of $2.27 a pound, the highest price since cotton began recorded-trading 140 yrs ago.
Bearish factors include (1) slack Chinese demand after May China cotton imports fell for a fourth month, -27% y/y to 145,000 MT, and (2) US cotton exporters in the week ended Jun 10 reporting more canceled orders than purchases for the eleventh straight week.
Bullish factors include (1) USDA's Jun 9 cut in its 2010/11 US cotton production estimate to 17 mln bales and the cut in its 2011-12 global cotton production estimate to 123.77 mln bales, (2) USDA's weekly crop conditions that show the US cotton crop as of Jun 12 in 28% good-to-excellent condition vs. last year's 62%, and (3) strong Chinese demand that reduced global supplies after 2010 China cotton imports surged 86% y/y to 2.84 MMT.
Weekly US cotton exports (week ended Jun 9) were 219.0 thousand running bales; cumulative 2010/11 (Aug-July) exports up +38% y/y.
Fundamental Outlook- Bull market correction -Cotton prices are consolidating well below their record high after the USDA lowered its US export estimates and from recent weakness in Chinese demand. The longer-term trend remains bullish on global supply concerns and a global stocks/use ratio of 36.3%, the tightest since 1993-1994. @ commodity prices
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