Trading remained heavy. U.S. 2015-16 exports projected below USDA’s January estimate by National Cotton Council economists. Global stocks expected to remain at high levels in 2016-17.
Cotton futures more than halved a plunge to a new contract low in spot March to close modestly lower Monday but still settled at the lowest finish in a year, extending FridayΆs bearish weekly reversal.
- March settled down 37 points to 59.60 cents, its lowest finish since late January 2015 after trading within a 137-point range from up 15 points at 60.12 cents to down 122 points at 58.75 cents.
- May closed down 24 points to 60.36 cents, July settled down 30 points to 61 cents and December finished down 20 points to 60.88 cents.
- Volume remained heavy at an estimated 64,270 lots, compared with 66,117 lots the previous session when spreads accounted for 44,276 lots or 67%, block trades 2,000 lots, EFS 1,538 lots and EFP 655 lots. Options volume totaled 6,698 calls and 4,995 puts.
Traders looked ahead to USDAΆs supply-demand estimates on Tuesday.World 2015-16 estimates are generally expected to show a reduction in production more than offsetting a possible cut in consumption, resulting in a decrease in global ending stocks.
On the domestic front, the National Cotton Council estimates U.S. 2015-16 exports at 9.5 million bales, down 15.5% from last season and below USDAΆs January estimate of 10 million bales.
The estimate was in an outlook report council economists presented at the NCCΆs 78th annual industrywide meeting over the weekend in Dallas.
Mid-January export sales were the lowest for any corresponding point since the 2001 marketing year, council economists said. The councilΆs estimate breaks down to just over 9 million bales of upland cotton and 475,000 bales of Pima or extra-long staple cotton.
To reach the council forecast, the weekly pace will need to increase throughout the remainder of the marketing year, NCC economists said, indicating that their estimate “may yet prove to be a bit optimistic.”
Domestic textile mills are expected to consume 3.6 million bales, up 25,000 bales from last season and the fourth consecutive year of increased consumption. This is the same as USDAΆs forecast last month.
“The Economic Adjustment Assistance Program continues to be an important source of stability, allowing mills to invest in new facilities and equipment,” the council said.
The councilΆs supply-demand estimates would generate ending stocks of 3.6 million bales, down 100,000 bales from the previous year but up from USDAΆs forecast last month of 3.1 million bales.
Typically, no revision is seen in the U.S. crop estimate following the annual January summary until final tweaks are made in acreage, yield and production in the May report.
Globally, the council used USDAΆs 2015-16 estimates and projected 2016-17 ending stocks of 96.56 million bales, down from 102.86 million. The world balance sheet for 2016-17 would indicate continued pressure on prices with a projected 2016-17 stocks-to-use ratio of 86.2%.
Futures open interest declined 1,327 lots Friday to 198,327, with MarchΆs down 8,956 lots to 88,480 and MayΆs up 5,004 lots to 58,508. Cert stocks edged up 12 bales to 26,928 bales on 1,630 newly certified bales and 1,618 bales decertified.
