AustraliaΆs cotton production forecast at 4.7 million bales, up from USDAΆs last estimate of 4 million bales. U.S. cotton exports fell in October as the nationΆs trade deficit widened sharply.
Cotton futures dawdled within the previous dayΆs range and settled a lightly traded session slightly higher Tuesday.
March finished up 32 points to 71.33 cents, just above the midpoint of its 84-point range from down 16 points at 70.85 cents to up 68 points at 71.69 cents. It set the range for the entire session overnight.
December, which expires Wednesday, eked up eight points to close at 72.38 cents, while December 2017 gained 36 points to 69.96 cents.
Volume slowed to an estimated 12,213 lots from a final 15,888 lots the prior session when spreads accounted for 3,425 lots or 22%, EFS 1,028 lots and EFP 55 lots. Options volume totaled 2,453 calls and 2,096 puts.
In international cotton news, AustraliaΆs crop is expected to reach 1.03 million metric tons (4.73 million 480-pound bales), up 150,000 tons (688,900 bales) from an earlier forecast, Dow Jones Newswires reported.
Commonwealth Bank of Australia said the Australian government forecast is for the second largest cotton crop on record.
“The increase was largely on the back of higher dryland sowings as soil conditions were very favorable during the planting period,” the report said.
Conditions now are trending a little too dry, it added, but forecasters say AustraliaΆs cotton areas are expected to see rainfall in fits and starts over the next couple of weeks.
The USDA estimated the crop in Australia, a major cotton exporter, at 4 million bales last month, unchanged from the October forecast and up from 2.6 million bales last season.
Much-needed rainfall as planting began had improved the reservoir levels for irrigation and increased expectations for additional dryland acreage, USDA cotton analysts had noted.
AustraliaΆs crop is contributing to higher Southern Hemisphere production, projected by USDA to rise to 11.67 million bales this season from 9.75 million bales in 2015-16.
A higher yield in Brazil has been expected to push its 2016-17 production to 6.5 million bales, 10% above last seasonΆs 5.9 million bales, despite slightly lower cotton area.
The USDAΆs world estimates last month showed a slight production increase from October to 103.28 million bales, mainly on a 500,000-bale hike in IndiaΆs crop to 27 million bales.
Projected world consumption was virtually unchanged at 111.99 million bales, narrowing the production shortfall to 8.71 million bales from 9.34 million. Ending stocks were forecast up 960,000 bales to 88.31 million, still the smallest since 2011-12 as China continues to reduce its surplus.
The USDA will issue updated U.S. and world supply-demand estimates at 11 a.m. CST on Friday.
In other news, the sharply widened U.S. trade deficit reported by the Commerce Department for October included all-cotton exports that month of 569,129 running bales, down from 798,958 RB in September and 965,711 RB in August but up from 366,230 RB in October 2015.
The overall trade deficit posted its biggest increase in more than 1-1/2 years in October as exports of soybeans, corn and consumer goods also fell. The trade gap widened 17.8% to $42.6 billion, the largest percentage increase since March 2015.
The data suggested that trade would be a drag on economic growth in the fourth quarter, but consumer spending and a firming housing market are expected to continue to provide support.
Futures open interest dropped 1,566 lots Monday to 250,974, with DecemberΆs down 56 lots to 439 and MarchΆs down 1,561 lots to 177,896. Cert stocks grew 3,365 bales to 61,450, up from 52,665 bales a week earlier but down from 65,302 bales a year ago. Awaiting review were 1,802 bales at Greenville, S.C.
