Rainfall chances improved on Texas Plains. China cotton policy talk aired. Export sales fell much below expectations. Upland new-crop loans outstanding rose to 27,665 bales.
Cotton futures skidded to a sharp loss in benchmark December Friday, settling below lows of the previous 10 sessions.
December closed off 114 points to 64.31 cents, in the lower quarter of its 165-point range from up 13 points at 65.58 to down 152 points at 63.93 cents. It settled at its lowest close since Aug. 19.
Nearby October dropped 69 points to 66.08 cents and March fell 96 points to 64.14 cents. For the week, the market lost 152 points in October, 226 points in December and 287 points in March.
Chances for showers and thunderstorms in the Lubbock area of the Texas High Plains improved to 60% Friday night, 50% Saturday, 30% Saturday night and 20% Sunday. Some heavy downpours are possible.
Volume quickened to an estimated 23,000 lots from 9,569 lots the previous session when spreads accounted for 2,377 lots or 25% and EFP 33 lots. Options volume totaled 3,358 calls and 4,735 puts.
Rumors about ChinaΆs cotton policy and weakness in Chinese cotton prices were thought to have contributed to sending prices through the 65-cent support area, basis December, in brisk overnight dealings.
Details remained skimpy. Talk circulated that some official announcement might be imminent. Partial cotton policy insights had emerged from a meeting of the National Development and Reform Commission in early August, Cotton Outlook said earlier in a monthly review.
State trading companies may be incentivized to buy cotton supplies from the leading Xinjiang producing area so as to assist in underpinning market prices and thus prevent them from falling too far below the target price, the report indicated.
Additionally, it was indicated that tight regulation of import quotas could be expected in the 2014-15 marketing year. Earlier reports had indicated the cotton support program would be limited to Xinjiang and would involve a target price equivalent to $1.29 a pound.
The final quantity sold in the state reserve auctions from November through August totaled 2,653,960 metric tons (12.189 million bales), according to Cotton Outlook. Cumulative sales of state reserve import stocks since April 1 were almost 95,000 tons (436,300 bales).
By Cotton OutlookΆs estimate, the auction series ended with the government retaining control of some 10.925 tons (50.18 million bales).
Meanwhile, net U.S. all-cotton export sales for shipment this season came in much lower than expected at 88,200 running bales during the week ended Aug. 28, down from 250,600 RB the prior week.
Commitments — outstanding sales plus shipments — edged up to 5.111 million RB, still up 1.365 million RB or 36% from a year ago. Total sales amounted to 49% of the USDA export estimate, compared with 37% of final 2013-14 exports at the corresponding point last season.
All-cotton shipments of 105,400 RB, against 100,200 RB the prior week, brought exports for the season to 414,600 RB. Shipments have remained hampered by tight nearby supply availability. Exports trailed year-ago shipments by 488,000 RB.
To achieve the USDA estimate, shipments need to average roughly 207,600 RB, while sales of approximately 109,800 RB would match the export forecast without any bridge carryover.
Separately, U.S. outstanding upland loans rose by 13,427 bales to 27,665 during the week ended Sept. 2, USDA reported. Entries totaled 30,658 bales and repayments were made on 17,231 bales. Upland loans outstanding on 2013-crop cotton declined 25,619 bales to 22,648.
Futures open interest gained 349 lots Thursday to 177,196, with DecemberΆs down 185 lots to 110,779 and MarchΆs up 438 lots to 50,302. Cert stocks dropped 3,627 bales to 63,355.
World prices as measured by the Cotlook A Index fell 50 points Friday morning to 74.45 cents, nudging the premium to ThursdayΆs December futures settlement out a point to 9 cents.
