U.S. crop estimate matched expectations as projected abandonment fell owing to rains in Southwest. World forecasts for 2014-15 featured higher beginning and ending stocks, equivalent increases in production and mill use and a decline in trade.

Cotton futures settled lower Wednesday on the heels of USDAΆs supply-demand report, led by July amid the ongoing rolling of positions forward.

July closed off 79 points to 85.51 cents, reversing off a five-session high from up 60 points at 86.90 cents to down 122 points at 85.08 cents. Mill fixations offered support near the low.

December eased six points to 77.19 cents, settling in the upper third of its 99-point range from up 24 points at 77.49 to down 75 points at 76.50 cents. The inverted July-December switch narrowed 73 points to settle at 832 points.

Volume slowed to an estimated 46,000 lots from 56,925 lots the prior session when spreads accounted for 40,838 lots or 72%, EFS 331 lots and EFP 238 lots. Options volume totaled 5,430 calls and 2,928 puts.

The U.S. 2014-15 production forecast came in precisely in line with expectations at 15 million bales, up 500,000 bales from a month ago. However, the export projection remained unchanged — an increase had been expected — at 9.7 million bales and ending stocks rose by a larger-than-expected 400,000 bales to 4.3 million.

Beginning stocks for 2014-15 fell 100,000 bales to 2.7 million on a less-than-expected 100,000-bale increase to 10.5 million in 2013-14 exports. Domestic mill use for next season remained at 3.7 million bales.

Abandonment is reduced owing to recent rainfall in the Southwest. U.S. abandonment is projected at 21%, down from 24% foreseen last month and below the preceding two years but still above the long-run average because of current subsoil moisture deficits in the Southwest.

The forecast stocks-to-use ratio of 32% would be the highest in six years, up from 29% projected last month and 19% now estimated for 2013-14.
The marketing year average price received by producers is projected to range from 60 to 80 cents, down 3 cents on both ends of the range. At the midpoint of 70 cents, prices would be down 10% from 2013-14.

Globally, 2014-15 beginning stocks rose by 1.09 million bales to 99 million, which was mainly responsible for a 1.05-million bale increase in ending stocks to a new record high of 102.71 million.

Production and consumption showed equivalent increases of 460,000 bales to 115.92 million and 112.29 million, respectively, while world trade fell 2% on the month to 35.6 million bales.

The decline in world trade included import cuts from a month ago of 500,000 bales each to 8 million for China and to 2.5 million for Pakistan, partly offset by a 200,000-bale increase to 2.9 million for Vietnam.

Exports fell 100,000 bales each to 3.1 million for Australia and to 750,000 for Turkmenistan and dropped 200,000 bales each to 3.3 million for Brazil and 2.5 million for Uzbekistan.

For 2013-14, world ending stocks are forecast up 1.1% from a month ago, largely on increased production, with IndiaΆs output up a million bales to 30.5 million. IndiaΆs domestic use rose by 750,000 bales to 23.75 million, exports by 200,000 bales to 9 million and ending stocks by 550,000 bales to 10.97 million.

ChinaΆs expected imports this season rose by 750,000 bales to 13.5 million. Ending stocks there are projected at 60.31 million bales this season and 60.76 million or 59% of the world carryout in 2014-15.

Futures open interest expanded 1,648 lots Tuesday to 182,769, with JulyΆs down 8,726 lots to 66,583 and DecemberΆs up 9,231 lots to 99,159. Cert stocks declined 1,174 bales to 412,847. There were 3,040 newly certified bales, 4,214 bales decertified and 17,765 bales awaiting review.

World values as measured by the Cotlook A Index gained 170 points Wednesday morning to 91.15 cents. The premium to TuesdayΆs July futures settlement narrowed five points to 4.85 cents.

Forward A Index values for 2014-15 dropped 40 points to 84.55 cents, widening the discount to the 2013-14 index by 210 points to 6.60 cents and narrowing the premium to TuesdayΆs December futures close by 36 points to 7.30 cents.