Cotton Finishes Narrowly Mixed
Cotton imports by China falling for the fifth consecutive year. Global trade focus shifts. Texas Plains harvest is continuing to quicken under sunny skies and unseasonably warm temperatures.
Cotton futures settled narrowly mixed Wednesday, with spot December finishing marginally lower after trading within a tight band inside the prior sessionΆs broad range.
December closed down 10 points to 63.76 cents, about the middle of its 67-point range from down 45 points at 63.41 to up 22 points at 64.08 cents. It finished above a 50% retracement (63.35) of the fall from the 67.00 high on Aug. 21 to the contract low at 59.70 on Sept. 24.
March settled down six points to 63.64 cents, while the other two current-crop contracts eked up a point and December slipped five points.
Volume slowed to an estimated 23,200 lots from 49,988 lots the previous session when spreads accounted for 12,906 lots or 28% and EFP 50 lots. Options volume totaled 1,914 calls and 6,598 puts.
China imported 1.16 million metric tons of cotton (5.33 million 480-pound bales) during the first nine months of the calendar year, down 42% from the corresponding period of 2014, data showed this week.
For the 2015-16 marketing year, ChinaΆs imports are forecast to fall for the fifth consecutive year to 5.75 million bales, USDAΆs Foreign Agricultural Service noted in a world markets and trade circular.
This would be down 35% from the previous seasonΆs 8.28 million bales and below 2008-09 levels, the last year before ChinaΆs aggressive reserve accumulation policy. Global trade focus is shifting as a result.
India and Australia were the prime beneficiaries of rising imports through 2011-12. They maintained robust market shares in 2013-14 as ChinaΆs imports began to fall but saw their exports to China drop sharply in 2014-15. Those export declines were attributed to quality and price considerations for India and reduced supplies for Australia.
Although total Chinese imports fell by almost half last year, U.S. exports to China declined only marginally, leading to strong growth in U.S. market share. It remains to be seen if U.S. market share can continue to increase enough to maintain export volume to an even smaller market this season, FAS says.
Global import demand is expected to decline this season as the fall in import demand by China more than offsets growing import demand in the rest of the world.
Record 2015-16 beginning stocks outside China suggest that exporting countries will need to compete aggressively in such alternative markets as Vietnam and Bangladesh to avoid further accumulation of stocks, FAS says.
On the crop scene, harvesting is continuing to quicken on the Texas High Plains under sunny skies and unseasonably warm temperatures, which have helped harvest-aid chemicals to work more effectively.
Highs of 91 degrees were forecast at Lubbock for Wednesday and Thursday ahead of a dry cool front expected to drop the highs to 68 degrees Friday and then around the mid-70s into early next week.
A slight chance for rain is forecast for Monday and Tuesday. Any disruption to field activities and cotton maturation is expected to be brief and to have little effect on the crop or on quality.
Twenty-four percent of the Texas crop had been harvested as of Sunday, up from 20% a year ago and 21% for the five-year average. Boll opening at 87% was up from 63% last year and 78% on average.
Futures open interest declined 950 lots Tuesday to 188,209, with DecemberΆs down 2,275 lots to 115,200 and MarchΆs up 1,162 lots to 53,651. Cert stocks dropped two bales to 43,222 on 540 newly certified bales and 542 decertified bales. Awaiting review were 463 bales.
