Supply-demand estimates left U.S. carryout unchanged, as expected, and reduced stocks outside China. Weekly export sales expectations reported mostly from 150,000 to 175,000 bales.
Cotton futures closed higher on heavy volume Wednesday, snapping a four-session losing streak, after supply-demand estimates left the U.S. carryout unchanged, as expected, and reduced world stocks outside China.
Most-active May settled up 73 points to 85.37 cents, in the lower half of its 189-point range from unchanged at 84.64 to 86.53 cents. July closed up 87 points to 87.48 cents and December up 78 points to 86.57 cents, both settling a few points below midrange.
The market posted the session highs ahead of the supply-demand report amid continued talk of revived export demand.
Volume climbed to an estimated 52,600 lots from 51,027 lots the previous session when spreads accounted for 28,964 lots or 57%, block trades 1,000 lots and EFP 87 lots. Options volume totaled 3,343 calls and 2,853 puts.
The U.S. cotton forecasts for 2012-13 featured offsetting increases in production and exports, resulting in ending stocks of 4.2 million bales, unchanged from last month.
Production rose by 280,000 bales to 17.29 million, based on USDAΆs end-of-season ginning data released March 25, and exports rose by 250,000 bales to 13 million, based on the larger supply and strong shipments to date. Domestic mill use was unchanged at 3.4 million bales.
The marketing year average price received by producers now is forecast at 70.50 to 73.50 cents, up 50 points on each end of the range, reflecting higher recent prices. This lifted the midpoint to 72 cents from 71.50 cents.
The stocks-to-use ratio dipped to 25.61% from 26.01% foreseen a month ago and 28.31% projected in February.
Globally, USDA boosted beginning stocks by 1.18 million bales to 70.16 million and ending stocks by 710,000 bales to 82.45 million. Stocks outside China fell 790,000 bales or 2% to 36.84 million bales.
World production eased down 170,000 bales to 119.7 million, consumption edged up 330,000 bales to 107.44 million and world trade jumped 1.8 million bales to 43.7 million.
Beginning stocks were raised mainly in India owing to adjustments to the 2010-11 and 2011-12 balance sheets, USDA said. Production fell 500,000 bales in Brazil to 5.8 million, partially offset by the increase in the United States.
The consumption gain included a 250,000-bale boost to 22 million for India and a 100,000-bale increase to 2.2 million for Vietnam.
Higher world trade featured a 1.5-million-bale surge to 16.5 million in ChinaΆs imports, based on reported allocations of additional import quotas to mills.
ChinaΆs stocks expanded a like amount to a new record 45.61 million bales, now 55.3% of the world carryout. With ChinaΆs massive national reserve under government control, more than half the world stocks are considered unavailable to the world marketplace.
Export estimates leaped 1.5 million bales to 7 million for India and 200,000 to 4.8 million for Australia but fell 100,000 to 4.5 million for Brazil and 100,000 to 250,000 for Mexico. IndiaΆs imports rose by 200,000 bales to 1.7 million as escalating exports tighten domestic supplies.
Meanwhile, expectations for the U.S. export sales report for the week ended April 4 appear to range mostly from around 150,000 to 175,000 running bales for delivery this season, trade sources said. The USDA is scheduled to release the report at 7:30 a.m. CDT Thursday.
Futures open interest dipped 833 lots Tuesday to 203,288, with MayΆs down 8,765 lots to 67,201, JulyΆs up 6,826 lots to 87,124 and DecemberΆs up 1,044 lots to 46,661.
Certificated stocks continued to expand, growing 4,090 bales to 431,902. There were 5,352 newly certified bales, 1,263 bales decertified and 41,924 bales awaiting review.
World values as measured by the Cotlook A Index dropped 40 points Wednesday morning to 91.75 cents. The index premium to TuesdayΆs May futures settlement widened 34 points to 7.11 cents.