U.S. crop prospects pegged at 17.5 million bales, up 6% from last monthΆs forecast on mainly lower expected abandonment, with the stocks-to-use ratio projected at the largest since 2007-08. World ending stocks shaved marginally.
Cotton futures closed with triple-digit losses in the front three contracts Tuesday after USDA raised its 2014-15 U.S. ending stocks projection to the largest since 2008-09 and marginally shaved the still record high world carryout.
Benchmark December shed 103 points to close at 63.37 cents, just off the low of its 146-point range from up 35 points at 64.75 to down 111 points at 63.29 cents. It settled below lows of the prior four sessions.
Volume quickened to an estimated 18,400 lots from 14,725 lots the previous session when spreads accounted for 5,343 lots or 30%, EFS 90 lots and EFP 48 lots. Options volume totaled 3,351 calls and 1,966 puts.
U.S. crop prospects rose 6% on the month to 17.502 million bales, beyond the top end of survey estimates. The increase reflected mainly lower expected abandonment of 1.13 million acres or 9.9%. Yields are expected to average 820 pounds, against 821 pounds last year and the five-year average of 817 pounds.
The all-cotton output, which would be the largest in four years if achieved, includes 16.946 million bales of upland, up 38% from last year, and 556,000 bales of Pima, down 12%. Producers expect to harvest 10.241 million acres of all cotton, up 36% from 2013, including 10.065 million acres of upland and 175,900 acres of Pima.
Upland production prospects rose from 2013 in all regions except the West, climbing 946,000 bales to 5.4 million in the Southeast, 567,000 bales to 3.265 million in the Mid-South and 3.006 million bales to 7.535 million in the Southwest, where the Texas crop is up 2.8 million bales to 7.1 million. Upland estimates in the West fell 124,000 bales to 746,000.
Export prospects increased 500,000 bales on the month to 10.7 million on stronger foreign import demand and the larger available supply, USDA said. Domestic mill use remained at 3.8 million bales.
Beginning stocks fell 100,000 bales on preliminary ending stocks indications for 2013-14, including a 30,000-bale increase in exports.
Ending stocks for 2014-15 are forecast at 5.6 million bales, 39% of total market offtake, which would be the largest stocks-to-use ratio since 2007-08. The projected marketing year average farm price fell on both ends of the range from 58 to 72 cents, with the midpoint of 65 cents down from 73 cents foreseen a month ago and 77.50 cents last season.
Globally, production prospects climbed 1.22 million bales to 117.64 million and consumption rose by 1.26 million bales to 112.60 million. Beginning stocks fell 600,000 bales to 99.96 million owing to 2013-14 adjustments for several countries.
Production prospects rose for the United States, India and Mexico but fell for Brazil and Australia. Consumption rose 1.1% from last month and 3.9% from last season to the highest since 2010-11 as lower prices are expected to boost cottonΆs share of textile fiber use.
World ending stocks dipped 0.56% on the month to 105.08 million bales, with stocks outside China projected to grow about 4 million bales from 2013-14 to 42.72 million.
Futures open interest edged up 55 lots Monday to 165,563, with DecemberΆs down 1,051 lots to 117,384 and MarchΆs up 1,091 lots to 37,925. Certificated stocks declined 4,172 bales to 95,718.
World values as measured by the Cotlook A Index gained 25 points Tuesday morning to 73.90 cents, widening the premium to MondayΆs December futures settlement by six points to 9.50 cents.
