Latest ICAC estimates widened the margin by which world production expected to exceed consumption. World price forecast cut. Slight chance for overnight rainfall went unfulfilled on the Texas High Plains.
Cotton futures finished an inside-range day with modest gains Friday, snapping a five-session string of lower closes in spot December.
December closed up 20 points at 83.37 cents, in the lower quarter of its 92-point range from unchanged at 83.17 to 84.09 cents. It had set the range for the session by 6 a.m. CDT and dawdled indecisively the rest of the day. March settled up 21 points at 84.22 cents.
For the week, December lost 381 points or 4.4% — largest since the week ended Aug. 23 — after posting four weekly gains in a row and March dropped 291 points or 3.3%.
Volume edged up to an estimated 15,100 lots from 14,991 lots the previous session when spreads accounted for 4,990 lots or 33% and EFP for 528 lots. Options volume totaled 6,155 calls and 6,016 puts.
The latest estimates by the International Cotton Advisory Committee have widened the margin by which world production is expected to exceed consumption by 930,000 bales from a month ago to 9.33 million.
World production is forecast at 117.31 million bales, down a slight 40,000 bales and the lowest in four seasons, while mill use is projected at 107.98 million bales, down 970,000 bales. Consumption is shifting from China to other countries, notably India, Pakistan and Turkey, ICAC noted.
Around 2.7 million hectares or 6.67 million acres are projected to be planted to cotton in the southern hemisphere this season, similar to the 2012-13 area. However, higher yields are expected to result in an increase in South American production, ICAC said.
World cotton trade is projected at 39.04 million bales, down 1.38 million bales from the forecast a month ago. A decline of 4.74 million bales in global imports from last season is largely because of decreased imports by China.
Global ending stocks are projected at a record 93.24 million bales, up 1.75 million on the month and from 83.92 million in 2012-13. China started buying domestic cotton last month for its national reserves, which are expected to rise to 11.4 million metric tons or 52.36 million bales, up almost 2 million tons or 9.2 million bales from last season.
With world ending stocks outside China expected to increase by less than 200,000 tons, China will hold nearly 60% of the 2013-14 global carryout, ICAC said.
The ICAC cut its estimate of average world prices for 2013-14 as measured by the Cotlook A Index to 90 cents from 103 cents projected last month. The index averaged 88 cents last season.
Meanwhile, a slight chance for showers went unfulfilled overnight on the Texas High Plains. The only site reporting measurable rain was Hart in Castro County northwest of Lubbock with 0.02 of an inch.
However, chances for showers and thunderstorms in the Lubbock area improved to 40% Saturday night and Sunday, diminishing to 20% on Monday.
Rainfall at Lubbock since Sept. 1 has totaled only 0.54 of an inch, down from 2.04 inches last year and the normal of 3.19 inches. For the year, precipitation stands at 10.32 inches, compared with 10.46 inches a year ago the normal of 16.26 inches.
Futures open interest dipped 375 lots Thursday to 205,398, with DecemberΆs down 1,296 lots to 124,772 and MarchΆs up 436 lots to 61,971.
The Cotlook A Index was flat Friday morning at 89.40 cents, widening the premium to ThursdayΆs December futures settlement three points to 6.23 cents. For the week, the world price barometer lost 375 points.
