Soon-to-mature May ticked last on a new high. ChinaΆs first-quarter cotton imports fell 53.2% from a year ago. Mills stepped up their on-call pricing in May to 2,948 lots. Upland cotton under loan cut in half.
Cotton futures finished lower Friday as the U.S. dollar index extended a rebound to three sessions in a row and grains fell to steep losses.
Most-active July closed down 32 points to 63.69 cents, in the upper third of its 114-point range from up a single point at 64.02 cents to down 113 points at 62.88 cents. It remained within the overnight trading band throughout the day.
May, where first notice day arrives on Monday, settled down 41 points to 63.08 cents but ticked last on the session high and a new high for the move at 64.42 cents. December settled off 18 points to 62.52 cents.
For the week, the market still closed with gains of 305 points in May, 367 points in July and 331 points in December. Profit-taking ahead of the weekend may have contributed to the dayΆs losses.
Volume slowed to an estimated 32,759 lots from 45,059 lots the previous session when spreads accounted for 19,439 lots or 43% and EFS 400 lots. Options volume totaled 6,244 calls and 4,702 puts.
Reports that customs data showed ChinaΆs cotton imports fell 53.2% to 209,700 metric tons (963,100 statistical bales) from year-ago levels in the first calendar quarter also may have weighed on sentiment.
ChinaΆs imports for the 2015-16 marketing year ending July 31 are forecast by USDA at 5 million bales, down 39.6% from the previous season.
Recent policy shifts in China have discouraged production and limited imports, beginning the process of reducing the burdensome surplus of government-held stocks, USDA analysts have pointed out.
Previously, cotton policies in China insulated producers from declining world prices and at the same time encouraged imports. Under the new policies, ChinaΆs stocks are expected to decrease this season for the first time since 2010-11.
However, with stock reductions also expected in the rest of the world, ChinaΆs share of global stocks remains above 60%, indicating the countryΆs reserve stocks will overhang the market for several years.
Meanwhile, mills stepped up their on-call pricing to 2,948 lots in May last week and producers increased theirs to 2,033 lots, according to the latest data from the Commodity Futures Trading Commission. Mills reduced their unpriced May position to 7,465 lots and producers cut theirs to 1,821 lots.
With five trading sessions left before first notice day, the net call difference narrowed 915 lots to 5,644, which was 26.13% of MayΆs declining open interest, up from 8.52%. The unfixed mill position outweighed that of producers by a ratio of 4.1:1, up from 2.66:1.
Mills added 867 lots in July and producers added 884 lots, hiking their unfixed positions there to 18,368 and 4,182 lots, respectively. This narrowed the net call difference 18 lots to 14,186, which was 13.18% of JulyΆs rising open interest, down from 18.3%. Mills had 4.4 July contracts to price to every one held by producers.
Unpriced call positions in December rose 295 lots to 11,704 on the mill side and 153 lots to 10,370 on the producer side.
Separately, U.S. upland outstanding loans plunged 1.294 million running bales or 50.4% to 1.313 million during the week ended April 18, according to the latest USDA figures.
Loan repayments surged to 1.297 million RB and entries declined to 2,757 RB. Upland cotton under loan included 293,076 RB of Form A issued to individual growers and 1.218 million RB issued to marketing cooperatives or loan servicing agents.
Futures open interest dipped 295 lots Thursday to 289,644, with MayΆs down 2,317 lots to 3,108 and JulyΆs up 490 lots to 112,212. Cert stocks grew 968 bales to 44,904.
