Cotton prices (new crop Dec14 futures) continue to show improvement since the lows back in early and late February. Dec14 flirted with the 80-cent mark all last week—closing the week at 79.84.

This week will test whether or not there’s enough bullish optimism to move even higher or whether prices will retreat, which was the case back in mid-January when we last hit 80 cents.

With contract basis being very favorable, this move to near 80 cents may coax some producers into beginning bale contracts on a portion of expected 2014 production. A move above 80 cents this week, should that occur, could make that action even more likely.

USDA released its March crop production and supply/demand estimates last Monday. Of significance, U.S. 2013-14 crop year exports were raised 200,000 bales to 10.7 million bales. This has been anticipated for some time in light continued exports above the pace of earlier estimates. This tightens US stocks going into the 2014 crop marketing year down to only 2.8 million bales.

World use (demand) was lowered from 109.5 to 109.2 million bales. This is accounted for mostly by a ½ million bale decrease in China’s use. There was also a ½ million bale decrease for Pakistan while the projected use for India was up 250,000 bales. Projected usage was also adjusted upward in several smaller countries. Projected World ending stocks was increased 280,000 bales to 96.75 million bales (China’s ending stocks were increased 500,000 bales to 57.81 million bales).

From 2009-2010 to 2011-2012, World usage of cotton declined from 119 million bales to 103 million bales. It is expected that this was due to high cotton prices during that period.

The record-high usage was 124 million bales in 2006-2007 followed by 123.6 million bales the following year in 2007-2008. The usage for cotton has been in a downtrend since then.

Since the 2011 crop year, demand for cotton has now begun to slowly improve. Use for the 2013 crop year is projected at 109.2 million bales.