U.S. all-cotton production projected at a lower-than-expected 13.053 million bales and world ending stocks shaved marginally. First U.S. data on quality released at Corpus Christi.
Cotton futures rallied to post an outside-range reversal Monday on the heels of an unexpectedly small U.S. crop forecast and a slight downward revision in record high world ending stocks.
The December contract settled on a new seasonal high close at 90.08 cents, near the top of its 264-point range from down 118 points at 87.75 to up 146 points at 90.39. March closed up 87 points to 87.75 cents.
Volume increased to an estimated 27,000 lots from 17,358 lots the previous session when spreads totaled 6,442 lots or 37%. Options volume totaled 6,133 calls and 12,622 puts.
All-cotton production is estimated at 13.053 million bales in the seasonΆs first survey-based forecast, down 450,000 bales from the July projection. This is down from average analystsΆ estimates of 13.7 million reported in a Wall Street Journal survey below the low end of the range.
The forecast is the lowest since 2009. Abandonment is estimated nationally at 25%, virtually the same as last season, and at a mostly expected 40% in the Southwest owing to continued drought.
But yields fell to an average of 813 pounds from 887 pounds in 2012-13, mainly because of a 17% reduction in the Southeast from last yearΆs record. The projected yield is four pounds below the five-year average.
Upland production is projected at 12.473 million bales and Pima output at 580,000 bales, down 25% and 26%, respectively, from last seasonΆs 16.535 million and 780,000 bales.
By regions, upland production fell 1.42 million bales to 4.451 million in the Southeast, 1.542 million bales to 2.7 million in the Mid-South, 855,000 bales to 5.225 million in the Southwest and 245,000 bales to 952,000 in the West.
Compared with last month, the 2013-14 estimates include a marginal 100,000-bale cut to 3.8 million in beginning stocks and a 400,000-bale cut to 10.6 million in exports. Domestic mill use is unchanged at 3.5 million bales. Exports for 2012-13 were shaved 200,000 bales to 13.1 million.
Ending stocks for 2013-14 now are projected down 100,000 bales from the July forecast and a million bales below the August estimate for 2012-13 to 2.8 million, the equivalent of 20% of total market offtake.
The USDA narrowed its farm price forecast for the 2013-14 marketing year by 2 cents on each end from a month ago to 72 to 88 cents. The midpoint thus remained at 80 cents, up from 72 cents last season.
Globally, USDA trimmed ending stocks a marginal 570,000 bales from a month ago to 93.77 million, raised beginning stocks 770,000 bales to 86.35 million, cut production 1.64 million bales to 116.38 million and inched consumption up 60,000 bales to 109.85 million.
ChinaΆs crop fell a million bales to 33 million and ending stocks dropped 670,000 bales to 58.26 million, 62% of the projected world carryout. IndiaΆs crop was unchanged on the month but stocks were raised from 2011-12 forward owing to residual “loss” adjustments as official data used to estimate production, trade and mill use indicated “unsustainably low stock levels.” IndiaΆs exports rose in 201-13 and 2013-14.
Meanwhile, the first U.S. weekly quality report for the season showed the Corpus Christi classing office graded 1,871 bales during the week ended Thursday to bring the seasonΆs total to 2,197 bales.
Cotton tenderable on futures contracts totaled 37.9% for the season. Predominant were color grade 21 and leaf grade 2, while staple length averaged 33.7, mike 4.6, strength 30.3 and uniformity 80.7.
Futures open interest expanded 2,319 lots Friday, with DecemberΆs up 831 lots to 158,442 and MarchΆs up 1,090 lots to 25,988. Certificated stocks declined 10,953 bales to 51,674.
World values as measured by the Cotlook A Index slipped 40 points Monday morning to 94.05 cents. The premium to FridayΆs December futures settlement narrowed eight points to 5.12 cents.
