COTTON DIVISION

WEEKLY REPORT
by Alex Gansch -- Vice President / Senior Trader

April 14 - 17, 2003

The market drifted in relatively aimless mood back-and-forth during this abbreviated trading week. Sales out of the speculative camp, as partial liquidation of their still significant long position, coupled with grower selling have successfully limit any advances this market has attempted. Expiration of options the previous Friday added many longs, mainly for the speculative community, which chose to take in profits or roll their longs forward into July, hence the sharp sell-off especially for the month of May earlier this week. Nonetheless less than ideal planting conditions in California along with uncertainty remaining about the Australian crop quality as well as strong export figures kept prices stable. Crop progress as of April 13 shows an average of 8 percent planted throughout the entire US, which remained inline with last year’s progress of 9 percent and the five-year average of 8 percent. Noteworthy, however, was the delay in California and Arizona where so far only 17 percent have been planted versus 32 and 34 percent respectively last year. Meanwhile, the weekly export figure released Thursday added additional support as new sales during the week ending April 10 arrived at 220,300 bales, 45 percent above the prior week yet 22 percent under the 4-week average. General calculations show that these figures will still permit the US to reach its current target of 10.8 mio. bales for the present season. Weekly shipments of another astonishing 351,600 bales, 14 percent above the 4-week average, highlight the strong pace at which US grown cotton is leaving the States.
 

Analysts continue to point towards a gradual increase in prices as long as current demand figures for US cotton can be upheld, which is of particular importance given the fragile state of the global economy.

On April 15, the USDA accepted bids on 18,182 bales of 2001/2002 crop US Pima while simultaneously offering another 20,699 b/c of the same crop year produced in both California and the El Paso region for sale by April 22, 2003. This most recent sale by the government reduced forfeited CCC-Pima stocks of last year’s crop from 102,000 b/c to about 84,000 bales. Weekly Export sales meanwhile continue strong with an additional 11,300 bales sold for the week ending April 10. Cumulative sales for the 2002/2003 season have now reached 572,100 bales. Equally impressive are the rising numbers of new crop sales, which registered 8,300 bales for the 2003/2004 season, bringing the cumulative total to 28,300 bales or roughly twice that of last year at the same time. Unfortunately, growers in California are not quite so lucky these days as the weather has not been very cooperative of late. The traditional planting deadline of April 10 has well passed and many farmers are becoming worried that the old rule of thumb calling for 5 percent yield loss for every Pima acre planted after April 10 may cause significant losses. Upland varieties are currently providing a tempting alternative for those growers, who have yet to get their seed into the ground. It is generally estimated that to-date about 60 percent of expected Pima acreage has been planted in California, which may mean that total acreage in the end may not surpass 160,000 acres in total as originally calculated by the National Cotton Council back in February of this year. Price development over the past few weeks as well as the buying pattern from overseas’ customers confirm this concern.

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