Heavy rain fell in northwestern Texas Plains. IndiaΆs crop projected at 26.5 million bales by U.S. agricultural attach, 500,000 below USDA estimate. Imports forecast at a million bales and mill use relatively flat.
Cotton futures, unable to make progress to the downside, rallied late in the day to close on modest gains and a 17-session high finish in December Wednesday.
December closed up 30 points to 69.54 cents, just off the high of its 100-point range from down 65 points at 68.59 to up 35 points 69.59 cents. It finished for a second session on a new high close since Aug. 12.
Nearby October settled up 47 points to 69.53 cents, March added 37 points to 69.76 cents and December 2017 edged up 10 points to 69 cents.
Volume slowed to an estimated 16,683 lots from 22,888 lots the previous session when spreads accounted for 5,841 lots or 26%, EFS 41 lots and EFP 11 lots. Options volume totaled 3,469 calls and 336 puts.
Overnight rainfall on the Texas High Plains was mainly in the northwestern area. The heaviest measurements included 3.1 inches at Hart in Castro County, 2.9 at Olton and 2.6 at Littlefield in Lamb County, 2.52 at Morton in Cochran County and 2.24 at Friona in Parmer County.
Scattered thunderstorms are expected in the High and Rolling Plains through Saturday. A few of the storms could become strong to marginally severe and produce locally heavy downpours, forecasters say.
Newton, rapidly weakening as a tropical storm after hitting the resorts of MexicoΆs southern Baja as a hurricane, was expected to push into southeastern Arizona in the afternoon.
On the international scene, IndiaΆs 2016-17 cotton production is projected at 26.5 million 480-pound bales by the U.S. agricultural attach, down from USDAΆs August forecast of 27 million bales and the postΆs estimate for 2015-16 of 26.391 million bales.
The Mumbai post projects the area for harvest at 11 million hectares or 27.18 million acres, same as the USDA estimate and down 7.6% from last season. Yield prospects are higher owing to good monsoon rains but lower than USDAΆs forecast. Higher input costs and “better price realization” for competing crops have prompted farmers to move away from cotton.
Indian cotton prices have remained higher than global prices, prompting mills in the worldΆs largest cotton producer to import for short-term needs. The post forecast imports at 1 million bales, same as USDAΆs projection, and nudged its estimate for 2015-16 up to 1.06 million bales from USDAΆs 1.025 million.
The post forecast domestic mill use at 24 million bales, same as USDA, and put 2015-16 consumption at 24.2 million bales. Consumption is expected to remain relatively flat as mills focus on manufacturing blended yarns and fabrics with a higher percentage of man-made fiber to offset cotton price volatility.
Mills showed a preference for imported cotton, mostly from Australia and the United States because of lower contamination and trash content. Imports are expected to slow when new-crop arrivals begin in mid-October.
Both the post and USDA have exports at 4.2 million bales for this season and 5.8 million bales last season. Exports have fallen sharply as Indian cotton prices have remained higher than international prices.
The post sees IndiaΆs ending stocks at 11.23 million bales, down from 11.93 million in 2015-16, compared with USDAΆs 10.661 million and 10.861 million bales, respectively.
Futures open interest gained 1,170 lots Tuesday to 230,647, with DecemberΆs up 108 lots to 154,724 and MarchΆs up 634 lots to 50,269. Certified stocks grew 629 bales to 43,057.
