Delta producers appear likely to increase their cotton acreage “by a fair amount in some areas.” Mexican cotton production forecast to decline 4% in 2016-17.
Cotton futures finished in the green Wednesday, with spot May remaining within the price span established by early morning and settling just above midrange.
May closed up 29 points to 57.67 cents, chopping within a narrow 64-point range from down 10 points at 57.28 to up 54 points at 57.92 cents. It touched the session low on the overnight opening range and the high around 7:20 a.m. CDT.
July settled up 43 points to 57.72 cents, marking the first time it has closed over May since March 1, and December finished up 42 points to 57.45 cents.
Traders continued to tweak positions ahead of the U.S. prospective plantings report from USDA on Thursday. Also scheduled for release Thursday is the weekly export sales-shipments report.
Volume increased to an estimated 27,864 lots from 15,387 lots the previous session when spreads accounted for 47%, EFP 89 lots and EFS 35 lots. Options volume totaled 4,633 calls and 1,694 puts.
Delta growers appear likely to increase their cotton acreage “by a fair amount in some areas,” says John Bondurant, Memphis-based trader and Mid-South producer.
Bondurant said he personally leans to the higher side of U.S. estimates he identified as ranging mostly from about 9 million to 9.6 million acres, up from 8.58 million acres planted last year.
The big 2015 acreage of sorghum in the Delta “will almost completely go away due to poor yields last year and poor prices this year,” he said, adding that soybeans “offer almost no profit potential at current levels.”
When growers sell cotton equities at a recent new-crop value there of about 12 cents, the net of rebates, quality premiums and so forth is “probably something like 72 cents per pound,” Bondurant said. That can be “quite profitable” for high-yield farmers, he added in a Notebook report.
A lot of Delta farmers have sold their cotton pickers and arenΆt going back to cotton, heΆd pointed out previously. Producers apparently have lots of spare picker capacity, however. He said growers who still own pickers probably planted maybe 50% of their picker capacity last year.
On the international scene, MexicoΆs cotton production is forecast to decrease about 4% in 2016-17 owing to an expected 9% decline in planted area, according to a U.S. agricultural attach report.
The crop is projected at approximately 870,900 bales. Private sources said the decrease in planted area is mainly because of the need to rotate with such other crops as corn and vegetables in order to maintain more fertile soils.
Total domestic cotton consumption is forecast to increase slightly to 2 million bales and imports are estimated at 1.05 million bales. The post revised the import estimate for 2015-16 by 10% from USDAΆs projection to 1.07 million bales, mainly on lower production.
The Mexican government continues to support the countryΆs cotton growers and growth of the textile industry in general, the report said. The United States, which accounts for almost 100% of MexicoΆs cotton imports, is expected to remain the main cotton supplier.
Futures open interest grew 1,122 lots Tuesday to 216,510, with MayΆs up 200 lots to 111,173 and JulyΆs up 844 lots to 51,555. Cert stocks were unchanged at 47,037 bales.
