Talk of rising U.S. crop prospects amid showers and chances for more on the Texas High Plains contributed to pressuring prices. U.S. consumer confidence hit highest level in nearly seven years.
Cotton futures settled on a new low close for the move Tuesday, giving back the previous sessionΆs gain plus some after testing DecemberΆs intraday contract low.
December settled down 87 points to 65.01 cents, in the lower half of its 139-point range from up 11 points at 65.99 to down 128 points to 64.60 cents. It held above FridayΆs contract low of 64.53 cents.
Volume increased to an estimated 13,400 lots from 12,868 lots the previous session when spreads accounted for 2,639 lots and EFP 187 lots. Options volume totaled 3,665 calls and 2,275 puts.
Talk of growing U.S. crop prospects contributed to pressuring prices. Reports circulated of crop estimates ranging anywhere from 500,000 to 1.2 million bales above the 16.5 million projected by USDA earlier this month.
The July crop forecast rose sharply from the June estimate and topped the 2013-14 output by nearly 3.6 million bales. The USDAΆs National Agricultural Statistics Service on Aug. 12 will release results of its first survey-based estimate of the season.
Isolated to scattered thunderstorms early Tuesday on the Texas High Plains may have contributed to the price pressure, though beneficial rainfall amounts fell in only a small portion of the cotton area.
With showers and thunderstorms expected to continue in parts of the Plains through Thursday, Lubbock had received 0.18 of an inch as of early Tuesday afternoon.
The total for July coming into the day was 2.46 inches, 0.71 inch above normal but below 3.37 inches received last year. Precipitation for the year totaled 11.18 inches, a slight 0.18 of an inch above the long-term average and up from 8.46 inches last year. Since June 1, rainfall totaled 5.05 inches, against a normal of 4.79 inches and 5.04 inches a year ago.
Rainfall in the Southwest was mainly responsible for USDA cutting the projected abandonment nationally this month to 15% (1.67 million acres), down from 21% foreseen in June, near the 10-year average and the lowest since 2.5% in 2010. Projected abandonment in the Southwest was placed at the long-term average of 23%, compared with the 2012-13 average of 44%.
The U.S. yield forecast of 816 pounds per harvested acre ranked five pounds below last seasonΆs average and marginally below the previous five-year average.
In economic news, a gauge of U.S. consumer confidence hit its highest level in nearly seven years. The Conference Board, a private research group, said its index rose for the third straight month in July, partially a result of people surveyed saying that itΆs easier to find a job.
The index rose to 90.9 from a revised 86.4 in June, first reported as 85.2. The July reading was the highest since October 2007, before the last recession, and came in well above the 85 expected by economists.
Futures open interest increased 1,953 lots Monday to 160,725, with DecemberΆs up 1,704 lots to 123,790 and MarchΆs up 223 lots to 28,467. Cert stocks declined 7,638 bales to 157,081. There were 47 newly certified bales, 7,685 bales decertified and none awaiting review.
World values as measured by the Cotlook A Index gained 50 points Tuesday morning to 81 cents. The premium to MondayΆs October futures close widened 30 points to 15.64 cents.
Forward A Index values for 2014-15 rose 45 points to 74.25 cents, widening the discount to the 2013-14 index by five points to 6.75 cents and narrowing the premium to MondayΆs December futures close by eight points to 8.37 cents.
