World cotton trade expected to decline 8% in 2014-15, driven by reduced shipments to China, ICAC says. World prices forecast at 91 cents for 2013-14 and 87 cents for 2014-15.
Cotton futures finished some volatile price swings with spot July on the plus side for the fourth session in a row Tuesday, smack in the middle of the dayΆs trading range.
July closed up 88 points to 87.36 cents, trading from up 212 points at 88.60 cents to down 37 points at 86.11 cents. It touched the high around 5:25 a.m. CDT, fell to the low around 10:30 a.m., rebounded to the midrange close and ticked last at 87.63 cents.
December eked out a four-point gain to settle at 78.10 cents, just below the middle of its 99-point range from down 31 points at 77.75 to up 68 points at 78.74 cents. It had made an outside-range reversal to close higher on Monday after having finished with a gain only once in the previous 14 sessions through last week.
Volume rose to an estimated 33,500 lots from 32,530 lots the previous session when spreads accounted for 18,855 lots or 58%, EFP 182 lots and EFS 98 lots. Options volume totaled 1,732 calls and 2,384 puts.
World cotton trade is expected to decline 8% from this season to 8.1 million metric tons (37.2 million 480-pound bales) in 2014-15, driven by reduced shipments to China to a projected 2.1 million tons (9.6 million bales) from a record 5.3 million tons (24.3 million bales) in 2011-12.
Those are the latest estimates of the International Cotton Advisory Committee. While the increased volume of trade coming into 2013-14 had benefited many exporting countries and farmers, it didnΆt reflect improved cotton demand, the ICAC said in its latest monthly report.
In 2011-12 when imports increased by 26% to 9.8 million tons (45 million bales), world consumption decreased 7% to 22.8 million tons (104.7 million bales), the smallest mill use since 2003-04, ICAC said.
While world consumption is forecast to increase 3% from this season to 24.2 million tons (111.1 million bales) in 2014-15, it remains below the level seen in the seven years before international cotton prices spiked, ICAC said. World production is projected to decline 2% to 25.6 million tons (115.6 million bales).
The ICAC expects world ending stocks to grow 12% in 2013-14 from a year earlier to 19.94 million tons (91.58 million bales) and to expand by an additional 5% in 2014-15 to a record 20.92 million tons (96.08 million bales). Those carryout estimates are down 460,000 bales from a month ago for 2013-14 and up 229,000 bales for 2014-15.
World prices as measured by the Cotlook A Index are forecast by ICAC to average 91 cents in 2013-14 and 87 cents in 2014-15, up a cent and down 2 cents, respectively, from a month ago. The average last season was 88 cents. The forecasts are the approximate midpoints of ranges from 88 to 94 cents for 2013-14 and 71 to 106 cents for 2014-15.
Futures open interest gained 655 lots Monday to 189,234, with JulyΆs up 27 lots to 100,112 and DecemberΆs down 50 lots to 76,359. Talk has circulated that the slow liquidation of July ahead of first notice day on June 24 might suggest a big trade long or longs planning to take delivery.
Certificated stocks declined 5,468 bales to 411,563. There were 292 newly certified bales, 5,760 bales decertified and 812 bales awaiting review.
The Cotlook A Index gained 35 points Tuesday morning to 91.05 cents, widening the premium to MondayΆs July futures settlement by 14 points to 4.57 cents.
Forward A Index values for 2014-15 gained 550 points to 86.15 cents. This narrowed the discount to the 2013-14 index by 15 points to 4.90 cents and the premium to MondayΆs December futures close by nine points to 8.09 cents.
