World cotton consumption forecast to exceed production by 1.1 million bales in 2013-14, ICAC says. Little rain fell on the Plains.
Cotton futures settled higher for a second day Wednesday, bucking widespread losses in commodities — including a big drop in oil — and weakness in equities.
Spot May gained 35 points to close at 89.22 cents, in the middle of its 98-point range from down 15 points at 88.72 to up 83 points at 89.70. It posted the low within about the first half-hour of the overnight session and hit the high, a tick above TuesdayΆs high, around 8:30 a.m.
July settled up 34 points to 90.68 cents, above the midpoint of its 104-point range from 90.01 to 91.05 cents, and December closed up 70 points to 88.24 cents, just off the high of its 126-point trading span from 87.03 to 88.29 cents.
Volume slowed to an estimated 29,300 lots from 37,853 lots the previous session when spreads totaled 18,981 lots or 50% and EFP accounted for 628 lots. Options volume totaled 9,920 calls and 8,640 puts.
With planting beginning in the Northern Hemisphere, a 2% reduction in cotton area is expected, according to the International Cotton Advisory Committee. Yields are projected almost the same as in the prior season.
ChinaΆs output this season is expected to fall slightly to 7.3 million tons or 33.53 million 480-pound bales from 7.4 million tons or 33.99 million bales, ICAC said, and IndiaΆs output is forecast to decline to 5.6 million tons or 25.72 million bales from 6 million tons or 27.56 million bales.
Converted to bales, the ICACΆs April world estimates for 2013-14 show an increase in production of 4.2 million from a month ago to 107.8 million and a dip in consumption of 380,000 to 108.89 million. World trade is projected up 910,000 bales to 37.34 million and ending stocks up 3.08 million to 75.51 million.
For 2012-13, production is pegged at 119.47 million bales, down 1.14 million on the month; mill use at 107.52 million, up 460,000; trade at 40.15 million, up 2.02 million; and stocks at 76.66 million, down 1.42 million.
The USDA will update its 2012-13 U.S. and world supply-demand estimates on April 12. It is expected to raise the U.S. crop forecast to reflect end-of-season ginning figures reported last month.
Meanwhile, light overnight rainfall at official reporting stations in the cotton area of the Texas High Plains totaled no more than a few hundredths of an inch. Lubbock again recorded merely a trace.
On the demand scene, expectations for U.S. export sales during the week ended March 28 to be reported Thursday range mostly from 125,000 to 175,000 running bales for shipment this season, trade sources said. Sales the previous week were 143,000 bales of upland and 12,600 of Pima for a total of 155,600 RB.
Futures open interest increased 2,560 lots Tuesday to 210,835, with MayΆs down 2,422 lots to 111,302, JulyΆs up 3,669 lots to 55,463 and DecemberΆs up 1,254 lots to 42,112. Certificated stocks fell 1,758 bales to 422,580, with 24,507 bales awaiting review.
World values as measured by the Cotlook A Index gained 150 points Wednesday morning to 95.50 cents. The index premium to TuesdayΆs May futures settlement widened a couple of ticks to 6.63 cents.