Analysts estimated U.S. production at 12.9 million bales in line with the March ginning data. A slight widening is generally expected in in the first world production shortfall in six years.
Cotton futures extended closing gains to three in a row in heavy, spread-laden activity Monday as traders prepared for USDAΆs monthly supply-demand report.
Spot May closed up 64 points to 60.71 cents, its highest settlement since Feb. 5 and near the high of its 55-point range from up 21 points at 60.28 to up 76 points at 60.83 cents. May options expiry is Friday.
July settled up 68 points to 60.24 cents and December finished up 64 points to 59.48 cents. The new-crop contract closed on its highest settlement since Feb. 19.
Volume dropped to an estimated 57,265 lots from a huge 65,292 lots the previous session when spreads accounted for 40,101 lots or 61%, EFP 217 lots and EFS 102 lots. Options volume totaled 5,353 calls and 3,522 puts.
A slight downward adjustment, based on the March ginning report, is generally expected in U.S. production in USDAΆs April supply-demand estimates for 2015-16 scheduled for release at 11 a.m. CDT on Tuesday.
Gins had processed 12,523,850 running bales of upland and Pima combined as of March 1 and estimated that an additional 16,600 RB would be ginned after the end-of-season survey by USDAΆs National Agricultural Statistics Service.
This would translate into final rounded all-cotton ginning of approximately 12.9 million 480-pound statistical bales, using a standard conversion factor, down 0.3% from USDAΆs previous production estimate of 12.94 bales.
The USDA will further tweak the crop estimates on May 10 in its final 2015-16 estimates on acreage, yield and production.
A survey of cotton analysts by The Wall Street Journal showed an average production estimate of 12.9 million statistical bales within a range from 12.85 million to even with the USDA forecast.
Analysts estimated exports at an average of 9.52 million bales within a range of 9.4 million to 9.7 million, compared with USDAΆs projection of 9.5 million.
Their ending stocks estimates averaged 3.54 million bales, against USDAΆs March forecast of 3.6 million bales, and ranged from 3.5 million to 3.6 million.
Globally, some analysts expect a production shortfall, the first in six seasons, to widen slightly. The USDA last month estimated world production will fall 8.99 million bales shy of consumption.
Despite the shortfall, world cotton stocks at the end of this season, with China accounting for 62%, still were expected by USDA to represent nearly a yearΆs worth of mill use.
In late March, Cotton Outlook projected a world 2015-16 production deficit of 9.1 million bales, unchanged from a month earlier, while the International Cotton Advisory CommitteeΆs estimates indicated a shortfall of 8.1 million bales.
Futures open interest fell 5,211 lots Friday to 217,706, with MayΆs down 9,948 lots to 77,000 and JulyΆs up 3,689 lots to 77,640. This marked the first time that JulyΆs open interest exceeded MayΆs. Cert stocks grew 583 bales on 6,581 newly certified bales and 5,998 bales decertified.
