Light, consolidative-type trading within tight ranges has left cotton futures with slight losses on the heels of the largest calendar week gain in 16 weeks.
Most-active March dipped 50 points from its close on Friday, Nov. 29, to settle at 78.85 cents on Thursday, Dec. 5. It stayed within the 162-point trading span established on Nov. 29 from 78 to 79.62 cents and finished midrange.
March entered December having posted the largest weekly gain, 212 points, since Aug. 16 and eked out a marginal 15-point gain for the month to register a monthly reversal from a seasonal low.
But the market lacked follow-through, with daily trading ranges as tight as 50 points — narrowest since August 2010 — and volumes as thin as 9,202 lots, lightest since September, even including the 13,604-lot turnover for the abbreviated post-Thanksgiving Day session.
The approach of updated USDA supply-demand estimates on Tuesday, Dec. 10, may have been an inhibiting factor.
Cash grower-to-business sales climbed to a new crop year high of 76,924 bales from 45,147 bales the previous week on The Seam. Prices eased off 14 points to an average of 74 cents, reflecting an 18-point dip to 20.70 cents in premiums over loan repayment rates.
Another week of solid, larger-than-expected U.S. export sales, though down from the previous week, and big withdrawals of stocks in deliverable position failed to jar the futures market out of its lethargy.
Upland export sales dipped to 248,600 running bales during the week ended Nov. 28 from 265,700 bales the previous week, USDA reported. Expectations had ranged around 200,000 bales. The sales included 114,700 bales for Turkey, 51,400 for China, 31,900 for Indonesia, 21,700 for Brazil and 8,800 for Peru.
Upland shipments edged up to 106,500 bales from 96,300 bales, with 48,900 bales headed to China, 8,900 to Mexico, 8,000 to Turkey, 6,700 to Indonesia and 4,600 to Vietnam.
Certificated stocks plunged 110,290 bales on Thursday to 96,521 bales, down from 237,285 bales on Nov. 29. The major commercial stopper of December deliveries has been expected to decertify the cotton and likely ship it against export commitments.
On the crop scene, an arctic blast of freezing rain, sleet and snow moved into the West Texas Plains late in the week just as harvesting had barely resumed following an earlier wintry mix, while a wet period was in prospect for the Delta and Southeast.
Some concerns arose about the effects on yields and quality on cotton remaining on the stalk. A boll of cotton is at its highest inherent quality when it first opens.
While the harvest was around 90 percent complete in the immediate Lubbock area, industry sources said, an estimated 20 percent remained on the stalk in much of the remainder of the High and Rolling Plains.
Depending upon the amount of rain, ice and-or snow accumulations, the movement of modules of field-stored cotton to gins could be slowed or stalled. Most modules are covered with tarps, and that cotton shouldnΆt be adversely affected if the modules were properly built and located, observers said.
A variety of factors could affect any continued weathering of cotton remaining on the stalk, including how soon producers can get back into the fields and under what conditions.
Ice and wind could pull some already-loosened cotton from the bur and put it on the ground. But cotton grown in the Texas Plains is predominantly of tighter-boll, relatively stormproof-type varieties.
Based on conditions around Dec. 1, Informa Economics, Memphis-based analytical firm, estimated the U.S. crop at 13.61 million bales, sources said, up from USDAΆs November forecast of 13.11 million.
Informa projected yields at an average of 840 pounds per acre, up from USDAΆs 808 pounds and the five-year average of 817 pounds. Yields averaged 887 pounds last season on a crop of 17.32 million bales.
On the world scene, production is expected to outpace consumption by 8.59 million bales, down from 9.41 million foreseen a month ago, according to the latest International Cotton Advisory Committee estimates converted to 480-pound bales from metric tons.
The ICAC shaved 2013-14 world ending stocks to still a record high 93.33 million bales from 95.35 million projected last month.
Its production forecast slipped to 117.76 million bales from 118.17 million and its consumption forecast rose to 109.17 million bales from 108.76 million. Production is estimated down nearly 5 percent from last season and consumption up about 2 percent.
The projected world carryout remains at an all-time high of 85.5 percent of consumption, though down from 87.7 percent foreseen last month. Global cotton trade is estimated dpwn 680,000 bales to 38.77 million.
World prices as measured by the Cotlook A Index are forecast by ICAC at a 2013-14 average of 88 cents. This is unchanged from November and also from the 2013-14 average.
China, whose reserve and import policies are of course major world price factors, started selling 2011-crop cotton from its stockpile on Nov. 28 at 18,000 yuan per ton or 133 cents a pound for standard grade.
While China announced no overall planned sales volume, the ICAC secretariat estimated roughly 2 million to 3 million tons (9.2 million to 13.8 million bales) will be sold and that the ending stocks will be around 11 million to 12 million tons (50.5 million to 55.1 million bales).
China imported much of the surplus stock on the world market the last two seasons, allowing prices to remain relatively high. Its imports this season are expected to decrease 40 percent from last season to 3.1 million tons (14.2 million bales), ICAC said.
The reserves sales price is significantly higher than the import price with a 40 percent tariff, ICAC said. Thus unless international prices rise above the mid-90s and drop imports below expectations, China could account for some 37 percent of world imports, ICAC indicated.