U.S. crop raised 435,000 bales, exports 300,000 bales and ending stocks 200,000 bales. World ending stocks increased 1.5 million bales. Export commitments for 2016-17 rose to 9.043 million RB, up 3.579 million RB from a year ago.
Cotton futures finished on a seven-session low close Thursday on the heels of an unexpectedly large U.S. 2016-crop increase and a 1.5-million-bale hike in world ending stocks.
Spot March lost 80 points to settle at 72.34 cents, just off the low of its 155-point range from up 66 points at 73.80 to down 89 points at 72.25 cents. It finished below its nine-day moving average for the first time since Dec. 28.
The May contract shed 81 points to close at 72.85 cents, while December slipped 26 points to 71.10 cents.
Volume rose to an electronically estimated 36,500 lots from 30,831 lots the prior session when spreads accounted for 18,225 lots or 59%, EFS 20 lots and EFP nine lots.
Estimated U.S. all-cotton production increased 435,000 bales this month to 16.959 million, USDA reported, with the Texas crop rising 400,000 bales to 7.8 million.
Pre-report estimates of analysts and traders had ranged predominantly narrowly on either side of unchanged. The USDA raised its estimate of the upland crop 439,000 bales to 16.401 million and upped its forecast of the extra-long staple output 4,500 bales to 557,500.
Export expectations rose by 300,000 bales to 12.5 million, up 36% from last season, and projected mill use remained at 3.3 million bales, down from 3.45 million in 2015-16.
Ending stocks increased 200,000 bales to 5 million, up 1.2 million bales from a year ago and the largest since 2008-09. The stocks-to-use ratio is forecast at 31.6%, compared with 30.2% last season.
Analysts generally had expected a 200,000-bale increase in the export estimate and a corresponding decrease in the projected carryout.
The forecast range for the marketing year average price received by producers was narrowed a cent on each end to 65 to 69 cents a pound, leaving the midpoint unchanged at 67 cents. The average last season was 61.20 cents.
Globally, larger production was the main factor for the increase to 90.65 million in ending stocks. In addition to the U.S. crop increase, production rose by a million bales to 22 million in China, where USDA said inspection data indicated higher output in the Xinjiang region.
World production increased 1.1 million bales to 105.34 million, while consumption slipped 150,000 bales to 111.76 million. The expected crop shortfall thus narrowed to 6.42 million bales from 7.67 million foreseen a month ago and 14.79 million now estimated for 2015-16.
Mill use was reduced for India, Mexico and Turkey, mostly offset by a 500,000-bale increase to 36.25 million in China. The projected carryout in China rose by 500,000 bales to 48.35 million, 53% of world stocks.
World cotton trade edged upward to 35.6 million bales, mainly on higher projected imports by Pakistan — where the crop decreased based on ginning arrivals — and Bangladesh. Higher exports for the United States and India were partially offset by decreases for Uzbekistan and Australia.
Earlier in the session, U.S. all-cotton export sales for shipment this season topped expectations at 246,000 running bales during the week ended Jan. 5, up from 186,900 RB the prior week. This boosted 2016-17 commitments to 9.043 million RB, up 3.579 million RB or 65% from bookings a year ago.
All-cotton shipments of 222,200 RB, down from 259,600 RB the previous week, brought exports for the season to 4.231 million RB, up 1.707 million RB or 68% from the corresponding point last season.
Net sales for shipment next season of 5,700 RB nudged 2017-18 commitments to 570,600 RB, compared with forward bookings a year ago of 749,100 RB.
Futures open interest declined 1,163 lots Wednesday to 262,926, with MarchΆs down 3,011 lots to 172,206 and MayΆs down 318 lots to 42,980. Certified stocks grew 1,532 bales to 109,665.
