Low prices and a good range of quality should help move U.S. cotton in the export market, despite a large U.S. crop and more competition from India and Pakistan, according to an Alabama cotton merchant.

“Most people were surprised at the estimated size of this year’s U.S. cotton crop,” noted Bobby Weil, chairman and CEO of Weil Brothers Cotton, Montgomery, Ala.

The crop was forecast by USDA (on Oct. 12) at 21.5 million bales. The figure is 600,000 bales above last month’s estimate and 2.8 million above last year’s production.

Expectations were that high yields in the Mid-South and Southwest would be offset somewhat by lower yields in the Southeast, especially after several hurricanes blew through parts of Alabama, Georgia and Florida in August and September.

But now, yields in Mid-South and Southwest are projected to be record breakers when all is said and done, more than offsetting any Southeast losses, which, by the way, might be in better shape than first thought.

“It’s been a fabulous year for yield,” Weil said during the Ag Market Network’s October teleconference. “I’m not sure what the cause is, but the best we can do is applaud it and take advantage of it the best we can.”

USDA projected world cotton production of 109 million bales in its Oct. 12 report, an increase of over 2 million bales from the September report. This record-breaking crop presents a challenge for the U.S. export market, since the world will be producing 8 million or 9 million bales more than it will use in 2004-05.

China will provide some of the market, according to Weil. “China has had some bad weather that could affect its cotton crop, but we don’t have a handle on it. Still, it has a very big crop, by some estimates over 29 million bales.”

Chinese consumption is expected to approach 35 million bales, meaning China will again have to import a lot of cotton. India, on the other hand, will likely produce more than it consumes. “They will export some cotton, and Pakistan is also currently offering cotton. So we have some competition for U.S. cotton that we haven’t had in the last few years.”

The U.S. crop will offer the world a wide range of quality this year, according to Weil. “I have full confidence in merchants being able to market this crop and the government program to do its job.”

Cotton quality from south Texas “is high grade, high strength, long staple and easy to market,” Weil said. “The Mid-South is showing consistently high grades again, good micronaire, good staple and good strength before the rains came last week.

“The Southeast, with the hurricanes, has had a loss in quality. But we’ll have to see a lot more (classing information) before we make any final judgments. California has been a greenhouse. It’s a big crop and it will have wonderful quality.

“We’re going to be able to sell what anybody wants because we’re going to have soup to nuts,” Weil said. “We’ll have some low grades because of the hurricanes in the Southeast, medium grades because of the rains this past week in the Mid-South and we have some high grades from the first half of the Memphis Territory crop and the south Texas and central Texas crops.

While moving 109 million bales of cotton when there’s only a market for 102 million bales is a concern, low prices could actually help the export market, Weil noted. “The 45-47 cent area for December is a comfortable area for the time being for mills around the world to buy cotton,” Weil said.

“Once mills take care of their immediate needs, we could see the market decline further. The only thing that is going to turn it around is when the Chinese decide they want to take in the world carryover and put it into their reserves.”

Meanwhile, “many other countries aren’t offering cotton at this time, because they don’t like the price. This means they’re going to have to lower their prices or we’re going to sell out of all of our cotton.”

“As we go further into merchandising this crop, I see more and more pressure on the outside growths,” Weil added. “This is going to push the A-Index and the adjusted world price down, which is going to increase the loan deficiency payment.”

e-mail: erobinson@primediabusiness.com