IndiaΆs 2017-18 production estimated at 29 million bales by the FAS post in Mumbai, up a million bales from USDAΆs June forecast. Another round of strong U.S. weekly export sales expected.
Cotton futures settled higher Thursday as most-active December added to the prior dayΆs reversal up and finished on the plus side for the fourth time in five sessions.
December closed up 69 points to 68.35 cents, near the high of its 123-point range from down 45 points at 67.21, to up 78 points at 68.44 cents. It settled above the prior-session high.
March gained 78 points to close at 68.12 cents, just off the high of its 116-point range from 66.99 to 68.15 cents. Maturing July led the gains, closing up 115 points to 75.01 cents. The other contracts settled up 22 to 64 points.
A decline in U.S. weekly crop conditions, a reduction in certified stocks and favorable near-term technical indicators offered support.
Volume slowed to an estimated 20,847 lots from 24,022 lots the previous session. Options increased to 4,263 lots (2,440 calls and 1,823 puts) from 3,952 lots (2,984 calls and 968 puts).
On the international cotton scene, IndiaΆs 2017-18 is estimated at 29 million 480-pound bales by the U.S. Foreign Agricultural Service post in Mumbai based, up a million bales from USDAΆs official June forecast. The FAS estimate is based on prospects for a normal monsoon.
The post also revised its estimate of IndiaΆs 2016-17 output up 500,000 bales to 27 million, citing information from industry contacts and FAS analysis. Production the prior year was 26.4 million bales.
India, the worldΆs largest cotton producer, would account for 25% of the global 2017-18 production as estimated by USDA in June if the new FAS crop forecast is realized.
The FAS report maintained IndiaΆs 2017-18 planted cotton area at the USDA forecast at 11.5 million hectares (one hectare equals 2.471 acres), up from 10.5 million in 2016-17.
“With the timely onset of the monsoon and prospects for normal rainfall, yields are expected to be higher in most of the cotton growing states,” the report said.
IndiaΆs total 2017-18 domestic consumption is projected by the post at 24 million bales, compared with USDAΆs 24.2 million, and the FAS export forecast of 4.2 million bales mirrored USDAΆs. Ending stocks forecast at 14.53 million bales by the post, up from USDAΆs 13.34 million.
The USDAΆs updated supply-demand report will be released Wednesday. Last monthΆs report indicated world stocks are expected to decline for the third consecutive season, dropping nearly 2% (1.6 million bales) below 2016-17 to the lowest since 2011-12. However, the world stocks-to-use outside China was pegged at the highest since 2011-12 at 41.5%.
Meanwhile, another round of strong U.S. export sales is expected for USDAΆs weekly report to be released at 7:30 a.m. CDT on Friday, a day later than usual due to TuesdayΆs Independence Day holiday.
During the reporting week ended June 29, December futures traded from 66.15 cents, lowest since Aug. 31, to 67.89 cents and finished with a 50-point period gain to 67.24 cents. Net upland sales the prior week were 261,300 running bales for 2016-17 and 317,700 RB for 2017-18 for a total of 579,000 RB. Upland shipments were 249,600 RB.
Upland sales the last four weeks have averaged 145,200 RB for 2016-17 and 282,400 RB for 2017-18, while shipments have averaged 264,600 RB.
Futures open interest increased 1,363 lots Wednesday to 207,481, with JulyΆs down two lots to 126, DecemberΆs down 535 lots to 161,542 and MarchΆs up 1,691 lots to 30,112.
Certified stocks declined 20,275 bales to 293,761. There were 923 newly certified bales and 21,198 bales decertified. Awaiting review were 6,603 bales at Memphis.
