China Cotton Association crop estimate reported at 30.91 million bales, up from USDAΆs August forecast of 29.5 million. Scattered thunderstorms expected on the Texas High Plains.
Cotton futures settled at a new monthly high close in benchmark December Wednesday amid favorable technical action, mill buying and short-covering.
December closed up 57 points to 67.46 cents, in the upper quarter of its 114-point range from down 31 points at 66.58 to up 83 points at 67.72 cents. It achieved a 25% retracement (67.70) of the 22.72-cent move from the May 8 high to the Aug. 1 contract low of 62.02 cents.
Volume quickened to an estimated 23,300 lots from a final 17,567 lots the previous session when spreads totaled 6,200 lots or 35% and EFS 283 lots. Options volume totaled 2,719 calls and 4,428 puts.
A survey by the farmersΆ unit of the China Cotton Association and Xinjiang cooperatives has indicated estimates of cotton plantings in previous years have been understated and that the national area for 2014 is down 9.4% from last year.
Weighted average yields would translate into a crop of 6.73 million metric tons (30.91 million 480-pound bales), reports indicated, up from USDAΆs latest forecast for China of 29.5 million bales. The USDA forecast is down 8% from its estimate for last season of 32 million bales.
The CCA survey indicated 2014 plantings totaled 4.227 million hectares (one hectare equals 2.471 acres), compared with USDAΆs August estimate of 4.35 million hectares. The area reduction is linked mainly to fewer incentives for planting cotton in ChinaΆs eastern provinces.
Details still are awaited on the implementation of ChinaΆs cotton policy changes aimed at reducing stocks, which equate to more than half of this seasonΆs global cotton consumption forecast.
Meanwhile, scattered thunderstorms late Wednesday afternoon and night in the Texas High Plains are expected to be concentrated from western areas into the far southern Panhandle.
These storms arenΆt expected to be severe but could produce locally heavy rain and strong wind gusts, forecasters say, and would follow recent hit-and-miss shower activity. Rain chances in the Lubbock area are listed at 20% Wednesday, rising to 30% Thursday and Friday.
Growers in parts of the High Plains plan to quit irrigating cotton by Sept. 1 and some already have quit, depending upon crop conditions and outlook. The last effective boll-set date to produce a fully mature boll under “normal” conditions in the Lubbock area is around Aug. 20, cotton specialists say.
Producers then rely on rainfall to help fill out bolls and carry the crop to maturity. Watering too late can prove costly if the weather turns wet and cool and crop issues are compounded with an early freeze.
Futures open interest gained 3,024 lots Tuesday to 172,740, with DecemberΆs up 874 lots to 112,122 and MarchΆs up 969 lots to 46,440. Cert stocks declined 4,751 bales to 71,497, smallest since Oct. 2, 2013.
World prices as measured by the Cotlook A Index gained 65 points Wednesday morning to 75.75 cents, narrowing the premium to TuesdayΆs December futures settlement by nine points to 8.86 cents.
