USDA forecast hits cotton prices
THE US Department of Agriculture (USDA) sent cotton prices tumbling to a five-year low after the government department forecast rising supplies.
USDA analysts forecast production at 18m bales in their first estimate of US cotton supply and demand for 1999-2000.
The figure is a little higher than market expectations but 4.1m bales bigger than the 1998-99 crop.
The department estimated US 1999-2000 year-end stocks to be 5.5m bales, compared with trade estimates of 5.24m bales and up from 3.6m bales last year.
Traders were additionally concerned that a fresh round of export subsidies for US cotton may not be forthcoming.
The cotton market had been expecting that fresh funding for this subsidy would be added to the US Senates farm aid package.
But the farm aid supplement has been withdrawn.