IndiaΆs cotton crop, the worldΆs largest, projected by CAB at 27.4 million 480-pound statistical bales, compared with USDAΆs latest forecast of 26.5 million. Exports expected to fall sharply to 3.9 million bales.
Cotton futures settled on modest losses Tuesday, extending the losing streak to six in a row after posting the session high on the opening overnight and touching it again in the wee morning hours.
December closed down 28 points to 68.49 cents, its lowest finish since Oct. 11 and in the lower half of its 106-point range from up 37 points at 69.14 cents to down 69 points at 68.08 cents. The losing streak is the longest since May.
March dropped 20 points to settle at 69.02 cents, while December 2017 dipped 17 points to close at 68.69 cents.
Volume increased to an estimated 23,497 lots from 17,989 lots the previous session when spreads accounted for 17,989 lots or 45%. Options volume totaled 2,701 calls and 1,073 puts.
IndiaΆs cotton crop, the worldΆs largest, is projected at 35.1 million bales of 170 kilos, up 3.8% from last season, according to wire service reports quoting estimates of its Cotton Advisory Board.
This converts to 27.4 million 480-pound statistical bales, compared with USDAΆs forecast earlier this month of 26.5 million, up marginally from the World Agricultural Outlook BoardΆs estimate for 2015-16. A rebound in IndiaΆs yield is expected by USDA to more than offset a 10% reduction in cotton area.
Converted to 480-pound bales, IndiaΆs exports are projected by the CAB at the equivalent of 3.9 million, down from 5.4 million last season. Those compare with USDAΆs October forecasts of 3.9 million (identical) and 5.76 million bales, respectively.
The 28% reduction foreseen by the CAB is attributed largely to sharply lower purchases by Pakistan, IndiaΆs top export market, owing to a bigger Pakistani crop and rising hostilities between the two countries.
This has promoted talk that Pakistan might turn to such exporters as Brazil, the United States and some African countries for a larger portion of its import needs.
The USDA projects PakistanΆs imports at 2.2 million bales, down from 3.3 million in 2015-16, with cotton production forecast to rise to 8.25 million bales from 7 million.
Although PakistanΆs cotton area is the lowest in three decades, a favorable yield is expected by USDA to raise production 18% from the 2015-16 output.
IndiaΆs 2016-17 imports are estimated by its CAB at 1.33 million bales, compared with USDAΆs forecast of 1.5 million bales. The USDA forecast is up from its estimate for 2015-16 of 1.07 million bales, linked to IndiaΆs high imports early this season.
There remains an imponderable huge gap between the CABΆs forecast of IndiaΆs ending stocks and the much higher carryout projected by USDA.
Futures open interest expanded 2,573 lots Monday to 260,404, with DecemberΆs up 123 lots to 144,362 and MarchΆs up 1,480 lots to 77,161. Cert stocks grew 314 bales to 26,393. There were 490 newly certified bales and 176 bales decertified.
