U.S. upland cotton classing reached 10.394 million running bales, about 86% of the USDA production forecast. China lowered quality requirements for stockpile procurements in three provinces.
Cotton futures extended gains from the previous sessionΆs impressive technical performance Monday, finishing on a new high close for the move on light volume.
Spot March gained 54 points to settle at 84.66 cents, around the upper third of its 127-point range from down 32 points at 83.80 to up 95 points at 85.07 cents. This was its highest close since Oct. 17, though it remained within the prior-session range.
The May contract rose 48 points to 84.18 cents, July added 50 points to 83.92 cents and December edged up 11 points to 78.02 cents.
Spot cotton futures, which lost ground in 2011 and 2012, is on track to finish the year above the close on Dec. 31 last year at 75.14 cents.
Volume slowed to an estimated 10,400 lots from 17,881 lots the previous session when spreads accounted for 4,725 lots or 26% and EFP for 176 lots. Options volume totaled 2,328 calls and 2,449 puts.
U.S. upland classing slowed to 459,909 running bales during the week ended Dec. 26 from 792,781 bales the previous week, boosting the total for the season to 10.394 million running bales.
This was about 28% behind the 14.354 million bales classed a year ago. The 10 classing offices have graded about 86% of the upland production forecast by USDA in its December estimate.
Cotton tenderable on futures contracts fell to 59.3% for the week and to 62.8% for the season, against 62% and 63%, respectively, the week before. A year ago, 58.4% classed for the season met tenderable requirements and USDA had graded about 90% of the final upland output.
All-cotton classing of 480,231 running bales for the week — including 20,322 bales of Pima — brought the count for the season to 10.894 million bales, compared with 14.906 million bales a year ago.
Final ginning figures will be released in March, and USDAΆs National Agricultural Statistics Service then will incorporate that data into its final 2013-14 crop report on acreage, yield and production.
Meanwhile, ChinaΆs National Development and Reform Commission announced last week that quality requirements for stockpile procurement will be reduced in three provinces where bad weather damaged the crop and constrained purchase volumes.
The news contributed to a sharp rally in ChinaΆs Zhengzhou cotton futures amid fears of a shortage of deliverable cotton, analysts said. Most-active May soared 2.07% on Friday, then gave back some of the gain on Monday with a loss of 0.57%.
Purchases from the three provinces — Hubei, Hunan and Jiangzi — cannot exceed the seasonΆs total output, estimated at a combined 838,000 metric tons or 3.85 million 480-pound bales.
U.S. futures open interest expanded 1,867 lots Friday to 170,874, with MarchΆs up 544 lots to 111,497 and MayΆs up 596 lots to 33,101. Certificated stocks were unchanged at 35,315 bales.
World values as measured by the Cotlook A Index gained 100 points Monday morning to 89.25 cents. The premium to FridayΆs March futures settlement narrowed 23 points to 5.13 cents.
