Cotton Ekes Out Small Closing Gains
Analysts projected U.S. cotton production at 13.78 million bales in wide-ranging estimates and ending stocks at 3.94 million. World cotton consumption estimates eyed.
Cotton futures hit an 11-session high in overnight dealings, drifted back to about unchanged and finished with small gains Thursday ahead of monthly supply-demand estimates and a delayed weekly export sales report.
Benchmark December closed up 13 points to 63.05 cents, near the low of its 99-point range from up 98 points at 63.90 to down a point at 62.91 cents. It has posted five lower highs in a row since last weekΆs new low for the move at 62.11 cents. March edged up 12 points to settle at 62.80 cents.
Volume rose to an estimated 16,100 lots from 11,146 lots the previous session when spreads accounted for 3,170 lots or 28%, EFS 42 lots and EFP 10 lots. Options volume totaled 1,679 calls and 956 puts.
Analysts projected U.S. cotton production at an average of 13.78 million bales in a survey compiled by The Wall Street Journal, up from 13.08 million bales forecast by USDA last month.
The USDA will release its updated crop forecast and monthly supply-demand estimates at 11 a.m. CDT on Friday, preceded by the weekly export sales report — delayed by the Labor Day holiday — at 7:30 a.m. CDT.
The analystsΆ projections spanned a wide range from 13 million to 14.99 million bales. Opinions have differed widely on planted acres, yields and abandonment.
Reporting on results of its first survey-based forecast of the 2015 crop, USDA stunned the market last month by cutting its production estimate by 1.4 million bales from the July projection and 3.2 million bales or 20% from last seasonΆs output. The production decrease resulted from lower area and yield.
Planted acres were estimated at 8.9 million, 100,000 acres lower than previously indicated and down 2.1 million acres from last year. The acreage-for-harvest estimate of 7.9 million implied an abandonment rate of 11%, compared with 15% last year. Yields were forecast at 795 pounds, down from 838 pounds in 2014 and the five-year average of 829 pounds.
Weekly crop condition reports had featured ratings above both those of the prior year and the five-year average, largely attributable to improvements in the Southwest, where beneficial rains had delayed plantings and cotton lagged normal development.
Analysts estimated exports at an average of 10.17 million bales within a range from 9.8 million to 10.69 million bales, compared with USDAΆs forecast of 10 million bales and last seasonΆs 11.2 million bales.
Their ending stocks estimates averaged 3.94 million bales within a range from 3 million to 4.7 million bales, against 3.1 million projected by USDA and the 2014-15 carryout of 3.7 million bales.
Globally, much attention will focus on the mill use forecast, which many in the trade think was overstated last month at 114.65 million bales, up 2.5% from the estimate for 2014-15 and the highest since 2010-11 in the face of a tough macro environment.
The latest International Cotton Advisory Committee projection of 114.96 million bales is a bit above the USDA forecast, compared with Cotton OutlookΆs late-August forecast of 109.94 million bales.
Differences are smaller in world production estimates. The USDA projected 108.99 million bales, down 10 million bales from 2014-15, while ICAC estimated 108.85 million and Cotton Outlook forecast 107.25 million.
Futures open interest gained 903 lots Wednesday to 180,578, with DecemberΆs up 157 lots to 123,884 and MarchΆs up 689 lots to 43,565. Cert stocks declined 1,143 bales to 59,078.
