Jan. 12 (Bloomberg) -- The U.S. cut its cotton-crop estimate for a third straight month on declines in Texas, where the worst drought in at least a century reduced production.
Output will total 15.67 million bales in the harvest that started in August, down from 15.83 million projected last month, the U.S. Department of Agriculture said today in a report. Nine analysts surveyed by Bloomberg News expected 15.8 million, on average. The previous crop was 18.1 million bales.
Texas, the biggest U.S. cotton grower, recorded the driest October-September period since record-keeping started in 1895, according to the National Drought Mitigation Center in Lincoln, Nebraska. The USDA also cut its estimate for U.S. exports, even as it expects China, the world’s biggest consumer, to import more of the fiber.
“It is hard to imagine that weather can be any worse than it has been for cotton over the last two years, especially in Texas,” Shawn Hackett, the president of Boynton Beach, Florida- based Hackett Financial Advisors Inc., said in a Jan. 3 report.
Prices for the fiber have slumped 56 percent from a record $2.197 a pound in March as world economies slowed. Cotton for March delivery fell 0.1 percent to 96.87 cents a pound yesterday on ICE Futures U.S. in New York.
The U.S., the largest cotton exporter, may ship 11 million bales in the marketing year that began on Aug. 1, compared with last month’s forecast for 11.3 million, the USDA said. The agency attributed the decline partly to overseas competition.
U.S. stockpiles at the end of the season will total 3.7 million bales, up from the agency’s prior estimate of 3.5 million, according to the report. A bale weighs 480 pounds, or 218 kilograms.
China will import 16 million bales, up from 15.5 million forecast in December. At the same time, the USDA cut its projection for Chinese use to 44 million bales from 45 million in the previous estimate.
“Consumption is estimated 1 million bales lower for China, as the substantial accumulation of cotton in the national reserve is expected to support prices and constrain mill use,” the agency said in the report. China is the world’s top grower, consumer and importer.
World output will be 122.84 million bales, less than last month’s forecast of 123.42 million, the USDA said. Production was cut mainly in the U.S. and India, the world’s second-biggest grower.
Global use will be 109.99 million bales, down from the projection of 111.34 million in December, the USDA said. World stockpiles as of July 31 will total 58.35 million bales, compared with the previous estimate of 57.67 million, the agency said.
--Editors: Daniel Enoch, Patrick McKiernan.
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