March closed on marginal loss. U.S. crop estimate raised slightly, exports hiked and ending stocks reduced from last month. Record yield still forecast. World estimates featured lower beginning stocks, production and ending stocks.
Cotton futures reversed off a triple-digit gain, climbing above the prior-session high, to close on a marginal loss Tuesday as trading quickened on the heels of USDA’s monthly supply-demand estimates.
March settled down nine points to 72.91 cents, near the low of its 143-point range from up 119-points to down 24 points at 72.76 cents. It touched the high prior to the supply-demand updates and slipped below Monday’s low in post-report action. March closed within five ticks of where it opened overnight.
May eased eight points to settle at 73.50 cents, trading within a 138-point range from 74.74 to 73.36 cents. The other contracts closed down two to 37 points, with December 2018 off the most at 71.56 cents.
Volume rose to an estimated 33,842 lots from 25,404 lots the previous session when spreads accounted for 9,853 lots or 39%, EFP 14 lots and EFS 10 lots. Options volume increased to 12,867 lots (6,358 calls and 6,509 puts) from 3,089 lots (1,790 calls and 1,299 puts).
U.S. all-cotton production is forecast up 60,000 bales or less than 1% from the November projection to 21.44 million, up 25% from last year, USDA’s National Agricultural Statistics Service reported.
Yields are expected to average 902 pounds per harvested acre, up 2 pounds from last month, 35 pounds from last year and 63 pounds from the five-year average. If realized, the yield would be the highest on record.
Upland cotton production is forecast at 20.713 million bales, up from 20.65 million projected last month and 16.601 million last year, while the Pima estimate of 727,000 bales was carried forward from last month and is up from 568,900 bales in 2016.
Record high upland yields are expected in Missouri and Arkansas and record high upland production in Kansas, Oklahoma and Texas. The upland crop in top-producing Texas is forecast up 400,000 bales from last month and 1.4 million bales from last year to 9.5 million despite hurricane losses in South Texas and an early freeze on the High Plains.
All-cotton ginning totaled 11.335 million running bales prior to Dec. 1, up 10% from 10.296 million RB through the corresponding period last season. Texas gins had processed 4.394 million RB, up 17.6% from 3.735 million a year ago.
Export prospects rose by 300,000 bales on the month to 14.8 million on reduced production in other countries, while domestic mill use remained at 3.35 million bales. Those would be the third largest exports on record, behind 14.92 million last season and 17.67 million in 2005-06.
The forecast range for the marketing year average price received by producers was raised 3 cents on each end to 63.69 cents and a midpoint of 66 cents, compared with 68 cents last year and 61.2 cents in 2015-16.
Globally, USDA cut beginning stocks 1.02 million bales to 87.65 million, lowered production 1.5 million bales to 119.96 million and reduced ending stocks 2.88 million bales to 88 million. The carryout reduction was in countries outside China where ending stocks were lowered to 48.33 million bales, still up 9.1 million from beginning stocks.
World production fell 1.5 million bales on the month to 119.96 million as reductions for Pakistan, India, Burkina Faso, Argentina and Australia were only partially offset by increases in Turkey and Central Asia. The crop in India, the top world producer, declined 500,000 bales to 29.5 million.
A long-awaited revision dropped India’s beginning stocks by a million bales, resulting in a similar decline in the global 2017-18 beginning inventory. The revision reflected higher Indian mill use since 2015-16, and both India’s and world consumption are forecast higher this month — up 250,000 to 24.75 million bales and 340,000 globally to 119.59 million.
World consumption is forecast to grow at a 4.2% annual rate, more than double its long-run level. A marginal increase of 350,000 bales now is expected in world ending stocks from the year-earlier carryover.
Futures open interest dipped 326 lots to 252,771 on Monday, with March’s down 1,655 lots to 168,927 and May’s up 492 lots to 44,594. Certified stocks remained at 47,628 bales.
Source: Agfax