Constructive U.S. export sales are expected. Increased export sales, smaller crop and lower ending stocks are expected in U.S. supply-demand estimates. China is set to resume sales of government stocks on Monday.
Cotton futures settled on modest gains in contracts through March 2019 Wednesday. May is up the most as traders awaited the U.S. weekly export sales-shipments report and the updated supply-demand estimates.
May finished up 43 points at 82.86 cents, near the middle of its inside-day range from down 65 points at 81.78, to up 134 points at 83.77 cents. It rallied after dipping to within seven points of the prior-day low. March didn’t trade on its last trading day and went off the board at 84.20 cents, 134 points over May.
July eked up six points to settle at 82.55 cents, trading within a 167-point range from 82-to-82.56 cents, and December edged up seven ticks to 78.05 cents, a new contract high close and its eighth higher close in the last nine sessions.
Volume slowed to an estimated 43,100 lots from 69,801 lots the prior session when spreads accounted for 30,957 lots or 44%, EFP 232 lots and EFS also 232 lots. Options volume slipped to 6,688 lots (4,925 calls and 1,763 puts) from 24,147 lots (17,944 calls and 6,203 puts).
Constructive U.S. weekly export sales are expected to range around, or slightly above, the prior week’s net 294,100 running bales of upland, which were down 20% from the previous four-week average. The export sales will be released at 7:30 a.m. CST Thursday, followed by the supply-demand reports at 11 a.m. CST.
Analysts on average expect an increase of 390,000 statistical bales to 14.89 million SB of all-cotton in the updated USDA supply-demand estimates scheduled for release later Thursday. Big export commitments, up 19% from a year ago, are expected to outweigh slow shipments, down 9% from last year’s pace.
Prices during the reporting week ended March 1 ranged from 79.47-to-83.06 cents. Discounted low micronaire cotton, a measure of fiber fineness or maturity, has helped to bolster export sales amid tightening supplies of high grades.
Net upland sales the last four weeks have averaged 365,100 RB a week and upland shipments have averaged 342,300 RB, up from the prior four-week average shipping pace of 277,300 RB.
The supply-demand estimates are expected on average to show a 140,000-bale cut to 21.12 million in U.S. 2017-18 all-cotton production and a 520,000-bale reduction to 5.48 million in ending stocks. World ending stocks are seen down 730,000 bales to 87.82 million.
On the international scene, Chin auctioning of government-held stocks is set to begin Monday and extend through Aug. 31. Details are reported unchanged from last year. Offerings will from the 2011-13 crops.
Futures open interest fell 1,126 lots to 270,289 on Tuesday, with March’s down two lots to 19 prior to the issuance of 19 delivery notices Wednesday and May’s down 2,413 lots to 131,508. Certified stocks declined 8,810 bales to 93,613 on decertification of 2,279 bales and the addition of 11,089 bales.
