Last week the USDA reported 15.9 million bales of cotton production. This is down 1.1 million bales (350,000 tons of cottonseed) from the November report and 3.9 million bales (1,050,000 tons of cottonseed) less than last year. This was a surprise as the USDA had been maintaining a 17.0 mb crop over the last few months; however, not a surprise if you talk to ginners across the country. Gins remain bullish as the report has reenforced their thinking. It’s hard to see much downside due to very little cottonseed offered in the open market. Demand is good on the East Coast and Mid-South regions which is where we need to buy cottonseed for California. Texas is $30 per ton overvalued relative to California.