Cotton Finishes Slightly Mixed

Cut in U.S. crop estimate and lower world production and consumption estimates expected in USDA supply-demand report. IndiaΆs crop estimated unchanged, consumption lower and exports higher.

U.S. cotton futures finished mixed Tuesday, with March settling with a small loss and remaining within FridayΆs trading range as traders looked ahead to updated supply-demand estimates.

March closed down 13 points to 64.44 cents, just above the middle of its 73-point range from down 60 points at 63.97 to up 13 points at 64.70 cents. December expired at 62.27 cents, 217 points under March. May finished down seven points at 65.21 cents.

New-crop contracts closed on the plus side, with December 2016 edging up 12 points to a new high close for the move at 65.71 cents.

Volume slipped to an estimated 22,600 lots from 25,790 the previous session when spreads accounted for 9,031 lots or 35%, EFS 1,000 lots and EFP 10 lots. Options volume totaled 4,229 calls and 1,764 puts.

Analysts generally expect lower U.S. and world production and lower global mill use in USDAΆs monthly supply-demand estimates scheduled for release at 11 a.m. CST on Wednesday.

Some analysts have projected U.S. production down 200,000 to 300,000-plus bales from USDAΆs estimate last month of 13.28 million bales, down 19% from last year. Recent strengthening of weekly export sales may hold the export estimate steady, barring a larger-than-expected crop cut, some say, though shipments have lagged the pace needed to achieve the forecast.

Globally, Cotton Outlook has estimated production at 102.97 million bales and consumption at 107.43 million bales, compared with USDAΆs November forecasts of 105.63 million 111.59 million bales, respectively.

Mill use in China, the worldΆs largest cotton consumer, is estimated at 28.89 million bales by Cotton Outlook and 33 million bales by USDA.

Separately, India, projected to replace China as the worldΆs top cotton producer, is expected to harvest 28.5 million 480-pound bales off a finalized planted area of 11.8 million hectares (29.158 million acres), according to a U.S. agricultural attach report.

This is unchanged from USDAΆs November estimate and compares with last seasonΆs 29.5 million bales. The postΆs estimate of the planted area also is in line with the USDA forecast.

The Cotton Corporation of India has intensified new-crop minimum support program procurement across the country, the Foreign Agricultural Service report from Mumbai said.

Arrivals for the 2015-16 marketing year were 3.22 million bales as of Nov. 26, according to CCI figures. Daily arrivals were estimated at 122,118 bales. The CCI continues selling 2014-15 cotton via its e-auction platform and MSP operations had purchased close to 162,300 bales.

The FSA report projected consumption at 25.3 million bales and imports at 800,000 bales, both 200,000 bales below the USDA estimates, and forecast exports at 4.7 million bales, up from USDAΆs 4.4 million bales.

Exports surged in November as new-crop arrivals were shipped to Pakistan, China and Bangladesh, the report said. More than 50% went to Pakistan. Exports are expected to remain strong in the coming months, especially to neighboring countries.

The government of India approved another export incentive scheme last month to boost sales.

IndiaΆs ending stocks are forecast at 12.059 million bales by the FAS post, compared with USDAΆs 12.986 million bales.

Futures open interest gained 555 lots Monday to 190,908, with DecemberΆs unchanged at seven lots, MarchΆs down 809 lots to 143,092 and MayΆs up 668 lots to 27,154. Cert stocks were unchanged at 65,302 bales.