While El Nino typically brings dry weather to Asia, with impacts
already being felt in Australia, Indonesia and India, it is
known for wet weather in parts of North and South America.
The National Weather Service has forecast a more than 50% chance
of El Nino forming during the northern summer of 2023.
"If we move into an El Nino pattern, we would see more rainfall
in the U.S. and this would mean higher production, higher yields
and less abandonment this year," said Bailey Thomen, cotton risk
management associate at StoneX Group.
Last year, more than three-quarters of Texas, which accounts for
about 40% of U.S. cotton output, suffered from one of the worst
droughts in years.
As a result, U.S. farmers were forced to abandon a record amount
of their land, with the resultant supply shortfall driving
prices to an 11-year peak in May.
"Last year, Texas had almost 70% abandonment due to drought,"
the Texas Farm Bureau said.
However, too much rainfall may prove to be a spoilsport, leading
to yield losses and quality downgrades.
"The most crucial part will be when the rains arrive. It will be
great if they arrive by April-May," Kansas-based commodity
analyst Sid Love said.
Expectations of higher U.S. cotton output come at a time of
weakening global demand for the fiber.
Demand concerns have prompted about 6% decline in U.S. cotton
futures this year, and prices hit a 20-week low this week amid
the ongoing banking sector crisis. [COT/N]
The USDA lowered its 2022/23 world cotton consumption estimates
to 110.11 million bales in March, from 110.66 million bales
forecast a month ago.
The market will be highly dependent on what happens with the
global economy, said Matthew Looney, data scientist at
International Cotton Advisory Committee, predicting consumption
would remain low into the 2023/24 season.
"China's recovery is a positive sign while the ongoing banking
crisis poses economic risks which could weigh on demand," said
Jim Nunn, owner of Tennessee-based cotton brokerage Nunn Cotton.
(Reporting by Ashitha Shivaprasad and Rahul Paswan in Bengaluru;
Editing by Naveen Thukral)
[© 2023 Thomson Reuters. All rights
reserved.] Copyright 2022 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](../../22/NEWS/column_spacer.png)
|
|