Cotton Markets Rally on Tight Supplies: Delta Yields Drop While Export Sales Triple
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Cotton Markets Rally on Tight Supplies: Delta Yields Drop While Export Sales Triple
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This is your Daily Cotton Price Tracker with Vanessa Clark podcast.
Hey everyone, welcome back to Daily Cotton Price Tracker. I'm Vanessa Clark, and today we're diving into what's happening in the cotton markets as we wrap up the week.
Let me start with where cotton is trading right now. Cotton futures are hovering around 64 to 65 cents per pound today. We saw the market open with some gains earlier this morning, up about 3 to 6 cents, which is a nice turnaround from yesterday when we closed down 22 to 28 points. So there's definitely some positive momentum heading into the weekend.
Now here's what's driving these movements. The USDA just released their January report, and it's highlighting some really important supply tightening. US cotton production was lowered by over 2 percent to 13.9 million bales, and that's primarily because of weaker yields in the Delta region. Ending stocks fell 7 percent to 4.2 million bales, which is actually supporting prices because it means we have less cotton available.
The national average yield dropped significantly, down 8 percent to 856 pounds per acre. This reduction in supply is pushing the stocks-to-use ratio lower, which is good news if you're bullish on cotton. The USDA also raised their projected season-average farm price to 61 cents per pound.
But here's something really encouraging for exporters. Earlier this week, we got some fantastic news on export sales. The week ending January 8 saw upland cotton sales surge to 339,724 running bales. That's a marketing year high and more than triple the previous week. Vietnam continues to be our largest buyer, followed by China and Pakistan. This rebound in demand is significant because it shows mills are stepping back into the market.
However, I do want to mention that while this week was strong, we're still running behind our seasonal pace. Cumulative sales are at about 62 percent of the USDA forecast for the marketing year, compared to a five-year average of 78 percent at this point in the season. So we do need to see more of these strong weeks to catch up.
On the global front, cotton output was revised down overall. Production gains in China were offset by cuts in India, the United States, Argentina, and Turkey. Global ending stocks declined by 1.5 million bales, bringing the stocks-to-use ratio below 63 percent, which is definitely supporting the market sentiment.
One thing to keep an eye on moving forward is that 80 percent of cotton production is currently in an area experiencing drought, including much of West Texas. That's something traders are watching closely.
Thanks so much for tuning in to Daily Cotton Price Tracker. I'm Vanessa Clark. Make sure you subscribe and join us tomorrow as we continue tracking these important market movements. We'll see you next time.
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