Unexpected rains on the Texas Plains with more in prospect there and in Georgia along with ChinaΆs sales campaign contributed to the selloff. The USDAΆs Foreign Agricultural Service post cut its estimate of IndiaΆs cotton area and crop.
Cotton futures locked down the 300-point daily limit in all 2016-17 marketing year contracts Tuesday following unexpected rains on the Texas Plains and forecasts for more.
December first touched limit down at 73.05 cents about 40 minutes into the overnight session, bounced as high as 74.39 cents in the wee morning hours, fell back to the limit around 10 a.m. CDT and stayed there the remainder of the day except for a brief five-point blip.
Nearby October and March closed at 73.06 and 73.54 cents, respectively, while December 2017 settled down 235 points at 71.80 cents.
Rains in the five-day forecast for Georgia, the second largest cotton-producing state, and ongoing sales of government-owned stocks by China contributed to the selloff.
Concerns — disputed by some traders — mounted that an extension of ChinaΆs sales campaign through September as confirmed Monday could curb imports in the worldΆs largest cotton consumer.
Volume increased to an estimated 27,177 lots from 19,508 lots the previous session when spreads accounted for 6,394 lots or 33%, EFS 43 lots and EFP 22 lots. Options volume totaled 6,572 calls and 10,058 puts.
Additional showers and thunderstorms were expected Tuesday afternoon and night in the Texas High and Rolling Plains around Lubbock with locally heavy rain possible.
Thirty-one of the National Weather ServiceΆs 38 cooperative reporting sites got 24-hour rainfall amounts ranging from a few hundredths of an inch to 3.89 inches and averaging close to an inch.
The heaviest amounts fell in predominantly ranching country, though cotton points north of Lubbock reported 1.9 inches at Tulia in Swisher County, 1.76 inches at Plainview in Hale County, 1.70 inches at Hart in Castro County and 1.15 inches at Muleshoe in Bailey County.
Lubbock registered 0.71 inch, but some big dryland areas to the south didnΆt get any rain. Rainfall chances are rated at 30% later Tuesday and again on Thursday, increasing to 40% on Friday and lingering into Monday.
On the international crop scene, the U.S. agricultural attach post in Mumbai has lowered its 2016-17 estimates for India, the worldΆs largest cotton producer, to a harvested area of 11.2 million hectares or 27.7 million acres and an output of 27 million bales.
These Foreign Agricultural Service estimates are down from 11.5 million hectares or 28.4 million acres and 27.5 million bales projected by USDA in July. The FAS post reduced the cotton area by almost 6% from the previous year.
Despite a good monsoon, the report said, farmers have shifted to food crops. This is attributed to expected market revenue, support and policy advocacy issued by central and state governments. Also, farmers are concerned with persisting pest pressures and rising input costs.
The drop in planted area will be partially offset with anticipated higher yields, the post said, but not by enough to increase production.
The post estimated IndiaΆs beginning stocks at 11.945 million bales and the carryout at 11.245 million bales, compared with USDAΆs forecasts last month of 11.186 million and 11.436 million bales, respectively.
Futures open interest grew 256 lots Monday to 248,298, with DecemberΆs down 338 lots to 185,913 and MarchΆs up 458 lots to 41,417. Certified stocks declined 426 bales to 97,629.
