Cotton Outlook projected 2016-17 global cotton production to increase by around 8% and consumption to rise by just 1.4%. On-call positions showed modest changes. Upland cotton under loan declined 56,696 bales.
Cotton futures extended a bounce Friday as most-active May posted back-to-back closing gains for the first time since Feb. 1-2.
- May touched the high in the late going and closed up 70 points to 57.11 cents, just off the peak of its 97-point range from down 18 points at 56.23 to up 79 points at 57.20 cents. It settled above its declining nine-day moving average for the first time since Feb. 19 and above highs of the prior two sessions, still below last week’s low.
- Spot March didnΆt trade, while July closed up 55 points to 56.71 cents and December finished up 45 points to 56.45 cents. For the week, May dipped 42 points, July dropped 62 points and December fell 64 points.
- Volume slowed to an estimated 19,049 lots from 20,257 lots the previous session when spreads accounted for 8,158 lots or 40%, EFP 225 lots and EFS 48 lots. Options volume totaled 4,057 calls and 2,860 puts.
Looking ahead, Cotton OutlookΆs initial, tentative estimates for 2016-17 global production and consumption imply a second year of decreasing world stock levels, albeit with the drop occurring in China and rising outside that country following a reduction this season.
Global cotton production is predicted to increase by around 8% to 22.748 million metric tons (104.48 million 480-pound bales), Cotton Outlook says in a monthly report, though that still represents a decline of 11% from 2014-15 output.
Planted area is forecast to rise modestly, including an increase in the United States. However, the biggest improvement is expected in a recovery of yields in some major producers, including India and Pakistan, where pest infestations and unseasonable weather have dogged the growing season this year.
Cotton consumption is expected to remain stagnant, Cotton Outlook says, with a projected increase of just 1.4%. An “unpromising economic environment” and continued intense competition for market share from manmade fibers for now rule out a more positive forecast, it says.
Meanwhile, unpriced on-call positions based in May cotton futures showed modest changes last week, edging up 79 lots to 13,736 on the mill side and rising 710 lots to 5,144 on the producer side.
The latest data reported by the Commodity Futures Trading Commission thus showed the net call difference narrowing 631 lots to 8,592, 7.09% of the rising May open interest, compared with 7.97% a week earlier.
The unpriced mill position outweighed that of producers by a ratio of 2.67:1, against 3:08:1 the previous week.
Elsewhere, mills added 354 lots in July and priced 103 lots in December, while producers added 271 lots in July, 176 lots in October and 27 lots in December.
Separately, U.S. outstanding loans on 2015-crop upland cotton declined 56,696 running bales to 4.544 million during the week ended Monday, according to the latest USDA figures.
Repayments were made on 90,008 RB and entries totaled 33,312 RB. Upland cotton under loan included 313,706 RB of Form A issued to individual growers and 4,230,745 RB of Form G issued to marketing cooperatives or loan servicing agents.
Futures open interest expanded 1,615 lots Thursday to 207,158, with MarchΆs down 42 lots to 224 and MayΆs up 548 lots to 124,399. Cert stocks declined 5,466 bales to 72,178. There were 2,283 newly certified bales and 7,729 bales decertified. Awaiting review were 1,053 bales.
