A 5% cut in U.S. exports raised ending stocks by 500,000 bales to 3.6 million, USDA’s monthly supply-demand report showed. World stocks rose by 1.2% from the January estimate. A modest reduction had been expected.
Cotton futures fell to a new contract low for a second day in spot March Tuesday, extending a losing streak to five sessions in a row on huge volume on the heels of USDAΆs monthly supply-demand estimates.
- March settled down 96 points to 58.64 cents, around the lower quarter of its 150-point range from up 15 points at 59.75 to down 135 points at 58.25 cents. It closed below MondayΆs contract low and its old low of 59.45 set in September.
- May and July closed down 112 points to 59.24 and 59.88 cents, respectively, while December settled down 107 points to 60.11 cents.
- Volume was estimated at a huge 71,784 lots, up from 64,270 lots the previous session when spreads accounted for 40,455 lots or 63% and EFP 382 lots. Options volume totaled 7,762 calls and 9,629 puts.
The USDA slashed projected U.S. 2015-16 exports by 5%, which raised the ending stocks forecast by 500,000 bales from a month ago to 3.6 million. Production and domestic mill consumption estimates were unchanged, as expected, at 12.94 million bales and 3.6 million bales, respectively.
Exports fell 500,000 bales to 9.5 million, reflecting continued sluggish sales, attributable mainly to a sharp decline in ChinaΆs imports from last season, USDA said.
The export estimate was the same as an earlier projection by National Cotton Council economists in an outlook report at the annual industrywide meeting over the weekend in Dallas.
Ending stocks now are projected at 27.5% of total market offtake, compared with 22.8% forecast a month ago, 25% last season and 16.7% two years ago.
The USDA raised the lower end of the range for the crop year average price received by producers by a cent on the lower end, now 58 to 61 cents per pound, with the midpoint at 59.50 cents. This compares with an average of 61.30 cents last season and 77.90 cents the year before that.
Globally, USDA shaved production by just 180,000 bales to 101.38 million, reduced consumption by 1.34 million bales to 109.60 million, cut cotton trade by nearly a million bales to 35.1 million and raised ending stocks by 1.2% to 104.08 million bales.
A deeper cut in production and a smaller reduction in consumption had been generally expected to result in a modest cut in global ending stocks.
Instead, the world carryout is projected up 1.22 million bales from a month ago but is still down from beginning stocks of 112.17 million bales. Stocks are forecast at 95% of consumption, compared with 92.7% foreseen in January and 101.7% last season.
ChinaΆs consumption and imports were each lowered 500,000 bales to 32 million and 5 million, respectively, on continued sluggish demand. A slower pace of imports in Pakistan indicated reduced consumption there, and USDA also lowered mill use estimates for India and Brazil.
With global imports down, export prospects declined for Brazil, India and Pakistan, in addition to the cut for the United States, the worldΆs leading cotton exporter.
Futures open interest dropped 491 lots Monday to 197,836, with MarchΆs down 6,642 lots to 81,838 and MayΆs up 4,541 lots to 63,049. Cert stocks grew 602 bales to 27,530.
