Higher U.S. crop estimate expected Wednesday, with differing views on demand. U.S. upland growers forward contract 10% of their expected acres.
Cotton futures tumbled to sharp closing losses in heavy dealings Monday amid follow-through selling from a weak finish last week.
Spot May fell 141 points to close at 85.38 cents, near the low of its 217-point range from up 60 points at 87.29 to down 157 points at 85.22 cents. It triggered sell stops when it took out the 86.12 low of week before last and finished at the lowest settlement since March 1.
The market has finished lower three sessions in a row. July lost 131 points to settle at 87.26 cents, also near the low of its 209-point range from 89.15 to 87.06, and December shed 90 points to 85.81, trading within a 175-point span from 87.18 to 85.43.
Volume climbed to an estimated 52,300 lots from 45,271 lots the prior session when spreads totaled 26,418 or 58%, block trades 3,000 lots and EFP 193 lots. Options volume totaled 8,082 calls and 14,323 puts.
Updated supply-demand estimates from USDA on Wednesday are expected to reflect an upward revision in the U.S. production estimate to bring it into line with the end-of-season ginning data reported March 25.
Gins processed the equivalent of 17,285,850 bales of 480-pounds net weight, USDAΆs National Agricultural Statistics Service reported. This is 275,950 bales above the last USDA estimate.
The gin totals included 16,506,550 bales of upland and 779,300 bales of Pima, up 256,550 and 19,400 bales, respectively, from the annual crop summary in January. Final acreage, yield and production revisions will released in May.
Based on the recent pace of sales and shipments, some analysts expect an increase in the export projection to offset the higher crop estimate, leaving the ending stocks forecast about unchanged.
However, other analysts expect USDA to defer adjusting its export forecast amid expectations in some quarters that China may step up sales from its huge reserves, displacing U.S. cotton, which would increase the carryout.
Also, some analysts expect domestic mill use to continue running ahead of a year ago during the remainder of the marketing year and to edge ahead of the USDA projection, which has been unchanged since July at 3.4 million bales, up 3% from last season.
Meanwhile, U.S. upland growers had forward contracted about 10% of their expected acreage coming into April, compared with 5% during the corresponding period last year, according to informal surveys by the cotton division of USDAΆs Agricultural Marketing Service.
The survey is based on the NASS March prospective plantings report showing 9.82 million acres of upland, down 19% from last year. It includes cotton consigned to marketing organizations but doesnΆt include cotton contracted with those groups.
Producers two years ago had contracted 22% of their upland acres and in 2010 had booked 9%.
By regions, 2013—crop contracting totaled 27% in the Southeast, up from 8% in 2012; 14% in the Mid-South, down from 19%; 1% in the Southwest, against none last year; and 2% in the West, down from 4%.
Futures open interest fell 1,788 lots Friday to 209,106, with MayΆs down 9,875; lots to 88,294; JulyΆs up 7,252 lots to 74,252; and DecemberΆs up 859 lots to 454,238.
Certificated stocks declined 530 bales to 421,029. There were 262 newly certified bales, 792 bales decertified, and 46,579 bales awaiting review. Fort Worth-Dallas will become a delivery point starting with the December 2013 contract.
World values as measured by the Cotlook A Index fell 135 points Monday morning to 93.50 cents. The index premium to FridayΆs May futures settlement widened 19 points to 6.71 cents.