U.S. crop estimate topped expectations at 16.5 million bales, with carryout forecast at 5.2 million. World ending stocks jumped to a record of 105.7 million bales, with stocks outside China up to 43.4 million.
Cotton futures settled about midrange in benchmark December Friday after tumbling to a contract low on the heels of jumps in U.S. and world ending stocks in USDAΆs supply-demand estimates.
December closed off 43 points to 68.12 cents, a contract low settlement but 102 points off the low of its 200-point range from up 55 points at 69.10 to down 145 points at 67.10 cents. It lost 394 points for the week, its fifth consecutive weekly loss.
Volume increased to an estimated 26,300 lots from 21,020 lots the previous session when spreads totaled 5,098 lots or 24% and EFP 142 lots. Options volume totaled 5,618 calls and 9,707 puts.
U.S. production prospects rose by 1.5 million bales from the June estimate to 16.5 million on larger plantings and lower expected abandonment based on beneficial rain and improved crop conditions.
The crop forecast, up 3.59 million bales from the 2013-14 output, topped by 800,000 bales expectations reported in a survey of cotton analysts by The Wall Street Journal.
Plantings increased by an expected 270,000 acres to 11.37 million and the projected acres for harvest by 950,000 to 9.7 million. This reflects an abandonment of 14.7%, down from 21.2% foreseen last month.
Export prospects grew by 500,000 bales to 10.2 million on the larger available supply, while domestic mill use rose by 100,000 bales to 3.8 million on expanding U.S. mill capacity.
Despite the larger market offtake, projected ending stocks grew 900,000 bales to 5.2 million, up from 2.7 million in 2013-14 and the largest since 2008-09. The stocks-to-use ratio rose to 37.2% from 32.1% foreseen last month and an unchanged 32.1% estimated for 2013-14.
The forecast range for the 2014-15 marketing year average farm price is 60 to 76 cents, with the midpoint at a five-year low at 68 cents, down from 70 cents projected last month and 77.50 cents estimated for 2013-14.
Globally, USDA raised beginning stocks 1.56 million bales to 100.56 million, upped production 500,000 bales to 116.42 million, cut consumption 950,000 bales to 111.34 million and boosted ending stocks 2.97 million bales to a new all-time high of 105.68 million.
Ending stocks in the rest of the world outside China are projected at 43.42 million bales, up 1.47 million bales from the June forecast and 2.17 million bales from the upwardly revised estimate for 2013-14.
Beginning stocks rose mainly on higher estimated 2013-14 production for Brazil and lower consumption for China and Pakistan. ChinaΆs consumption fell a million bales for 2013-14 and 500,000 bales for 2014-15, with high domestic prices and uncertainty about future policies discouraging cotton use in favor of polyester.
However, ChinaΆs consumption is expected to grow 2 million bales or nearly 6% from 2013-14 to 36.5 million bales as a result of the announced elimination of government price supports.
Partially offsetting the U.S. production increase were decreases in the crop estimates for India, Australia and Brazil.
Aggregate world trade was little changed, with exports raised for the United States, Australia and Brazil and reduced for several other countries.
Futures open interest expanded 3,025 lots Thursday to 149,854, with OctoberΆs up 12 lots to 377, DecemberΆs up 217 lots to 118,782 and MarchΆs up 2,501 lots to 23,449.
Certificated stocks declined 13,721 bales to 383,893. There were 4,667 newly certified bales, 18,388 bales decertified and 15,274 bales awaiting review.
World prices as measured by the Cotlook A Index fell 95 points Friday morning to 83.85 cents. The premium to ThursdayΆs October futures settlement widened 70 points to 14.95 cents.
Forward A Index values for 2014-15 dropped 115 points to 76.25 cents, widening the discount to the 2013-14 index by 20 points to 7.60 cents and the premium to ThursdayΆs December futures close by three points to 7.70 cents.
