Another strong U.S. export sales report expected but likely down from the prior weekΆs highest since January 2015. U.S. share of world trade forecast higher as exports expand.
Cotton futures finished higher for a second day Wednesday as traders awaited the U.S. weekly export sales report and eyed Tropical Storm JuliaΆs slow movement northeast along the South Carolina coast.
Benchmark December closed up 63 points to 67.53 cents, near the high of its 121-point range from down 35 points at 66.55 to up 86 points at 67.76 cents. It completed an inside day within the prior-session range.
October settled up 88 points to 68.08 cents, March gained 63 points to 67.74 cents and December 2017 rose 71 points to 67.99 cents.
The USDA Monday cut its monthly estimate of cotton production in the Southeast by 187,000 bales to 4.3 million.
Volume slowed to an estimated 17,124 lots from 23,938 lots the previous session when spreads accounted for 7,125 lots or 30%, EFS 347 lots and EFP 50 lots. Options volume totaled 1,778 calls and 4,039 puts.
Another strong export sales report is generally expected when USDA releases data for the week ended Sept. 8 at 7:30 a.m. CDT on Thursday.
The sales, however, also are expected lower than upland registrations the prior week of 344,500 running bales, largest for the second straight week since January 2015.
Upland sales during the first four full weeks of the marketing year have averaged 283,700 RB. This is far above the weekly average required to match the USDA shipments estimate, which at 11.5 million statistical bales is up 25.7% from last season.
While world cotton trade is expected to decline slightly this season, the U.S. share is projected to increase to 34%, highest since 2010-11, mainly because of an expected 3.3-million-bale increase in production.
Offsetting the U.S. increase are declines for several major competitors, USDAΆs Foreign Agricultural Service says in a report on world markets and trade.
The largest decline is 30% to 1.9 million bales forecast for India. With lower beginning stocks, an expected drop in imports by Pakistan and a likely continued loss of market share in China, IndiaΆs exports are forecast at the lowest since 2008-09.
An export decline to 900 bales from 1.25 million is foreseen for Turkmenistan where reforms in its marketing system over the last couple of seasons have drawn previously excessive stocks down to the lowest in nearly a decade.
U.S. exports are expected to expand in several major markets. Little change is expected in ChinaΆs imports, but the U.S. share is likely to rise from the 2015-16 level, which was the lowest in more than a decade.
Owing to benefits of the North American Free Trade Agreement, U.S. exports to Mexico are expected to capture nearly all the projected increase in imports to 1.28 million bales from 980,000 bales.
A large drop in PakistanΆs import demand isnΆt expected to have a significant effect on U.S. exports. U.S. cotton traditionally has held a small share of that market, less than 10%.
With uncertainties linked to implications of TurkeyΆs antidumping case against U.S. cotton having been reduced, the U.S. market share there is expected to recover from the low levels of the last two seasons. A return to historical market share for 2016-17 would offset a decline on a larger crop to 3.7 million bales in TurkeyΆs imports.
U.S. export share likely will increase in other markets because of tighter supplies for other major exporters, FAS says.
Futures open interest gained 209 lots Tuesday to 230,433, though DecemberΆs fell 432 lots to 152,699 and MarchΆs dipped 69 lots to 49,373. Cert stocks declined to 33,958 bales from 35,309 bales.
