U.S. export commitments stand at 33% of USDAΆs 2013-14 forecast. Supply constraints expected to help limit exports to the lowest since 2000-01. World trade forecast to fall 18% from last seasonΆs record.
Cotton futures settled slightly ahead in benchmark December Thursday, rallying after falling below the previous-session low on the heels of a USDA report showing slower U.S. weekly export sales.
The December contract closed up 24 points to 91.79 cents, just off the high of its 127-point range from up 30 points at 91.85 to down 97 points at 90.58 cents. It was narrowly a new high close for the move.
March eked out a one-point closing gain to 88.96 cents, while deferred contracts settled with slight losses.
Volume slowed to an estimated 15,200 lots from 20,959 lots the previous session when spreads accounted for 6,192 lots or 30% and EFP for 1,040 lots. Options volume totaled 7,303 calls and 2,796 puts.
Net U.S. all-cotton export sales for this season of 56,500 running bales during the week ended Aug. 8 nudged 2013-14 commitments 3.402 million, down 979,000 RB or 22% from a year ago.
Commitments, including rollovers of unshipped sales from 2012-13, stood at 3.402 million bales, 33% of USDAΆs export forecast, compared with 34% of the new 2012-13 estimate at the corresponding point last season.
All-cotton shipments of 291,500 running bales brought exports for the season to 321,600 bales, up 125,000 from a year ago.
With supply constraints expected to limit exports, USDAΆs forecast for overall U.S. demand of 14.1 million statistical 480-pound bales is nearly 2.5 million bales below last season and the lowest since 1988-89.
Exports, projected at 10.6 million statistical bales, will continue to account for the bulk of demand at an estimated 75%.
Reduced import demand by China and increased competition for a smaller world trade is expected to help cut U.S. exports to the lowest since 2000-01, according to USDA.
The projected U.S. share of global trade of 28% is similar to last season but one of the lowest during the previous decade.
World trade is projected at 38.4 million bales, 18% below last seasonΆs record of nearly 46.7 million. The decrease is attributable to the projected reduction in ChinaΆs import demand to 11 million bales from 20.3 million in 2012-13.
Stable mill demand and rising stocks in China are expected to help reduce the countryΆs import needs to the lowest in four seasons. However, increases in a number of countries will help to offset a portion of the decline in China, the worldΆs largest cotton consumer.
Those countries, where consumption is expected to rise, include Pakistan, Mexico, Turkey and Thailand.
Reduced import demand is expected to keep shipments lower for most exporters. In addition to the decline seen for the United States, exports are forecast to fall 1.3 million bales to 6.3 million for India, 1.7 million bales to 4.3 million for Australia and 1.7 million bales also for Brazil to 2.6 million.
For Australia and Brazil, sharply lower beginning stocks resulted in lower exportable supplies.
Futures open interest expanded 2,877 lots Wednesday to 206,687, with DecemberΆs up 1,256 lots to 166,457 and MarchΆs up 1,254 lots to 29,754. Certificated stocks fell 4,840 bales to 44,340.
World prices as measured by the Cotlook A Index dropped 45 points to 95.95 cents. The premium to WednesdayΆs December futures settlement narrowed 28 points to 4.40 cents.
