Improvement expected from previous week’s disappointing U.S. weekly export sales. World cotton stocks expected to shrink this season owing to production loss, ICAC says.
Cotton futures finished on slight losses Wednesday, with most-active May extending a losing streak to four sessions in a row after a bounce stalled well shy of the prior-day high.
- May settled down 18 points to 55.93 cents, in the lower third of its 109-point range from down 47 points at 55.64 cents to up 62 points at 56.73 cents. May has posted only one gain — for 35 points — in the last nine sessions.
- Maturing March closed down 21 points to 58.04 cents, July fell 37 points to 55.77 cents and December dropped 28 points to 55.65 cents. The last trading day for the March contract is Tuesday.
- Volume slowed to an estimated 29,950 lots from 37,189 lots the previous session when spreads accounted for 14,404 lots or 39% and EFS 42 lots. Options volume totaled 1,323 calls and 4,613 puts.
Traders looked ahead to the U.S. export sales report set for release by USDA at 7:30 a.m. CST Thursday for the week ended Feb. 25. Improvement generally is expected from the prior weekΆs disappointing net upland sales of 110,600 running bales.
Upland sales the last four weeks have averaged 224,700 RB and shipments 187,300 RB. The USDAΆs 2015-16 export estimate of 9.5 million statistical 480-pound bales is down nearly 15% from 2014-15.
U.S. exports have faced strong competition from other machine-picked cotton from Brazil and Australia, USDA says. Lower exportable supplies and slashed imports by China, combined with U.S. dollar strength and concerns over crop quality, have reduced U.S. cottonΆs competitiveness.
Export commitments thus far have lagged significantly, hampered by quality issues and hand-to-mouth buying by foreign mills.
Meanwhile, with estimates converted to statistical bales from metric tons, the International Cotton Advisory Committee projected 2015-16 world production down 1.24 million from a month ago to 101.92 million and mill use down 1.06 million to 109.54 million.
The production shortfall thus widened 180,000 bales to 7.62 million. World ending stocks are projected to decline 8% from last season to 93.93 million bales, the first reduction since 2009-10 and about 86% of global consumption.
The reduction in stocks is because of a 15% decline in world cotton production and not to growth in consumption. In fact, world cotton consumption is forecast by ICAC to decline 2%.
As noted previously, low prices for polyester, the main competing fiber, have hurt world cotton consumption. Cotton consumption in China, the worldΆs largest consumer, has declined continuously since 2009-10 and is projected by ICAC at 32.61 million bales, down 5% from last season.
Futures open interest eased 23 lots Tuesday to 202,863, with MarchΆs down 78 lots to 297 and MayΆs down 2,430 lots to 123,368. Cert stocks increased to 74,303 bales from 69,670 bales. Awaiting review were 4,364 bales at Memphis.
