U.S. crop quality has continued to draw discussion, with an estimated 46% of the upland output expected to come from a record Texas output. Crop estimate on High Plains raised 175,000 bales to 5.57 million.
Cotton futures surged to triple-digit current-crop closing gains Wednesday as choppy price action in the immediate wake of differing views on USDA’s monthly supply-demand estimates gave way to renewed buying.
March led the gains, closing up 122 points to 74.13 cents, just off the high of its 132-point range from unchanged at 72.91 to 74.23 cents. It got within five ticks of last week’s high and closed back above its nine-day moving average.
May closed up 105 points to 74.55 cents, also near the high of its 113-point range from 74.65 to 73.52 cents, and July finished up 100 points to 74.87 cents. The other contracts settled up 28 to 74 points, with December 2018 up the most at 72.30 cents.
Volume slowed to an estimated 27,764 lots from 33,842 lots the prior session when spreads accounted for 14,259 lots or 42% and EFS 137 lots. Options volume declined to 4,589 lots (2,281 calls and 1,308 puts) from 12,867 lots (6,358 calls and 6,509 puts).
U.S. crop quality has continued to draw discussion, with an estimated 46% of the upland output expected to come from Texas. Tenderable cotton made up 74.8% of 11.827 million running bales of U.S. upland classed through last Thursday and 62.4% of 4.813 million RB graded in Texas.
A 400,000-bale increase from last month to a record 9.5 million bales in the Texas upland crop estimate, up 1.4 million bales from last year, was nearly offset by decreases in all other regions of the U.S. belt in USDA’s December supply-demand report. The prior Texas record was 8.44 million bales in 2005.
The new U.S. upland forecast showed a slight 63,000-bale hike from the November projection to 20.713 million bales, up 25% from last season’s 16.601 million bales.
By regions, monthly upland crop estimates declined 177,000 bales to 4.678 million in the Southeast, 140,000 to 4.345 million in the Mid-South and 20,000 bales to 905,000 in the West. Texas accounted for all the 400,000-bale increase to 10.785 million in the Southwest.
Production in the Texas High Plains rose by 175,000 bales to the second highest on record of 5.57 million, up from last season’s 5.118 million and behind only the all-time high of 5.677 million bales in 2005.
Yields have varied widely, but the projected average of 774 pounds per acre ranks as the area’s third highest on record behind 864 pounds in 2007 and 796 pounds in 2005. Last year’s average was 740 pounds.
The adjoining Rolling Plains crop forecast edged up 15,000 bales to 1.175 million, down from 1.244 million bales last season. Production in the High and Rolling Plains combined of 6.475 million bales is expected to account for 71% of the Texas upland output.
Industry sources still expect a sizable reduction in the U.S. Pima or extra-long staple crop estimate, which USDA carried forward this month at 727,000 bales, up from 568,900 bales last year.
Meanwhile, slower U.S. export sales are expected in the USDA report on Thursday for the week ended Dec. 7. Prices that week ranged from 72.10 to 74.27 cents and ended with a gain for the period of 142 points at 74.23 cents, basis March futures.
Upland sales the prior week fell 33% from the week before to 186,600 RB and have averaged 331,700 RB the last four weeks. Upland exports hit a crop high of 246,800 RB and have a four-week average of 134,700 RB.
Futures open interest expanded 1,289 lots to 254,060 on Tuesday, with March’s down 832 lots to 168,095 and May’s up 1,512 lots to 46,106. Certified stocks remained at 47,628 bales.
Source: Agfax