IndiaΆs cotton crop still could reach record high, federation official says. China bought 236,000 bales of domestic cotton ahead of a weeklong holiday.
Cotton futures, vulnerable to a setback after five higher closes in a row, settled lower amid suspected profit-taking Tuesday.
Benchmark December closed down 61 points to 86.60 cents, in the upper half of its 190-point range from up 17 points at 87.38 to down 173 points at 85.48 cents. It finished three points below MondayΆs low. March closed off 59 points to 86.39 cents.
Volume increased to an estimated 20,900 lots from 17,176 lots the previous session when spreads accounted for 6,195 lots or 36% and EFS for four lots. Options volume totaled 3,402 calls and 5,785 puts.
Contrary to earlier concerns about damage to IndiaΆs crop from excessive rains, the output in the worldΆs second largest cotton producer may exceed earlier estimates and reach a new record high.
News reports quoted an Indian Cotton Federation official as saying the higher yield may produce a crop larger than the currently projected 37 million bales (of 170 kilos or about 375 pounds), up from last yearΆs 34.7 million bales.
A Business Standard report quoted industry sources as saying pockets where cotton may have been adversely affected by excessive rains in some large producing states may be may be offset by higher yields in other areas.
Improved crop prospects in India were largely behind the million-bale September increase to 117.4 million 480-pound bales in USDAΆs world production estimate, down 3% from 2012-13 and 6% below the 2011-12 record.
The USDA raised its estimate of IndiaΆs crop a million bales from the previous month to a record 29 million 480-pound bales, up from 26.5 million bales the previous year.
In other news, China is reported to have bought 51,420 metric tons (236,168 statistical bales) of domestic cotton last week ahead of a weeklong mid-autumn holiday that began Tuesday. China began the third year of its controversial stockpiling program last month.
ThereΆs been talk that China may resume sales from the reserves later this month. ChinaΆs ending stocks are expected to account for 62% of the record high world carryout at the end of this season.
Futures open interest expanded 5,086 lots Monday to 200,456, with DecemberΆs up 2,589 lots to 128,065 and MarchΆs up 2,097 lots to 56,726. Certificated stocks were unchanged at 11,909 bales.
World values as measured by the Cotlook A Index gained 40 points Tuesday morning to 93.05 cents. The premium to MondayΆs December futures settlement narrowed 18 points to 5.84 cents.