Cotton Finishes Narrowly Mixed
Traders looked ahead to USDAΆs weekly export sales-shipments report. December 2016 closed at 65.01 cents, its highest finish since Aug. 21.
U.S. cotton futures finished narrowly mixed Wednesday as traders looked ahead to the weekly export sales-shipments report.
Most-active March finished down four points at 63.50 cents, just below the midpoint of its 68-point range from down 29 points at 63.25 to up 39 points at 63.93 cents. U.S. dollar strength and weak oil prices kept helped to keep rally attempts in check.
Maturing December settled down nine points to 62.11 cents and May edged up three points to close at 64.24 cents. December 2016 posted the largest gain, closing up 21 points to 65.01 cents, its highest finish since Aug. 21.
Volume slowed to an estimated 20,300 lots from 23,348 lots the previous session when spreads accounted for 6,219 lots or 27% and EFS 42 lots. Options volume totaled 1,442 calls and 2,567 puts.
World cotton futures settled down 43 points in the May contract, the first to trade, widening the premium over the U.S. May delivery by 43 points to 7.92 cents. Only three lots traded. Open interest coming into the session totaled 288 lots.
The U.S. export sales-shipments report for the week ended Nov. 26 is set for release by USDA at 7:30 CST on Thursday. Some traders expect sales to be supportive, though below the prior weekΆs volume.
Net upland sales during the week ended Nov. 19 for shipment this season hit a marketing year high of 267,586 running bales, up 96% from the prior four-week average and the largest — not counting rollovers from last season — since the week ended Jan. 29 when sales were 422,765 RB.
Upland sales the last four reporting weeks have averaged 184,298 RB and shipments have averaged 94,998 RB, both below the pace needed to achieve the USDA forecast. Prices during the latest reporting week ranged from 61.45 to 64.16 cents, basis March futures, with settlements ranging from 61.60 to 63.93 cents.
The latest USDA estimate put 2015-16 exports at 10.2 million statistical 480-pound bales (about 9.89 running bales), 73% of a projected 13.9 million bales of total U.S. demand, including a 3.4% increase from last season to 3.7 million bales in domestic mill use.
The total market offtake is expected to fall 920,000 bales from last season to the smallest since a similar demand in 1988-89.
Updated supply-demand estimates are scheduled for release next Wednesday. While exports are estimated at the lowest since 2000-01, the U.S. share of global trade is forecast to reach 30%, the second highest since 2010-11.
Some observers consider the export forecast optimistic, Cotton Outlook noted in a monthly summary, while others anticipate an improvement in demand during the months ahead when Chinese tariff-rated quota mills receive their 2016 TRQ allocations and spinners needing machine-picked cotton are moved to cover their requirements more actively.
U.S. futures open interest increased 2,363 lots Tuesday to 180,779, with DecemberΆ down 22 lots to 20, MarchΆs up 1,456 lots to 135,750 and MayΆs up 547 lots to 25,756. Certificated stocks were unchanged at 65,409 bales. Awaiting review were 175 bales.
