Crop size focus of market

The main fundamental force driving the cotton market for the next several months will be the export amounts, timely rainfall and the June 30 USDA acreage report. With carryover from last year's crop around 4 million bales, the new crop size relative to an estimated usage of 18 million bales will play

The potential for supply to far exceed usage stems from the 700,000 acre increase in intended acreage from last year's 14.9 million. Prospective yield and harvested acreage will be closely watched by traders. For example, a low yield of 600 pounds per harvested acre on only 90% of 15.6 million planted acres produces a short crop of 17.55 million bales. Likewise, a high 700 pound yield on 95 percent of acreage planted produces a large crop of 21.6 million bales.

A low yield and a large amount of planted acreage lost to adverse weather could push December futures above 65 cents. However, a large crop around 20 million bales could drive futures prices below 50 cents per pound. Based on production in recent years, the 5% to 10% loss in planted acreage before harvest and a 100 pound per acre yield variation are real possibilities. The prevailing market uncertainty clearly indicates that producers need a marketing plan to reduce the likelihood of receiving a price on the lower end of a likely 49- to 69-cent December `00 price range.