Results of Turkey’s study of U.S. cotton imports disputed. A National Cotton Council review of price data found no evidence of dumping.
Cotton futures closed mixed Friday, with March inverting amid continued heavy March-May switch activity and was the only contract to finish with a gain.
- March settled up 48 points to 58.90 cents, in the upper quarter of its 101-point range from down 27 points at 58.15 to up 74 points at 59.16 cents. Options traded in particularly heavy volume earlier this week prior to the expiration of March options on Friday.
- May eased off seven ticks to close at 58.64 cents, July dropped 24 points to 59.07 cents and December fell 65 points to 58.93 cents. July and December posted new contract lows.
- For the week, the market lost 107 points in March, 196 points in May, 223 points in July and 245 points in December.
- Volume slipped to an estimated 48,098 lots from a huge 74,454 lots the previous session when spreads accounted for 49,633 lots or 67%, EFS 3,989 lots, block trades 2,000 lots and EFP 210 lots. Options volume totaled 3,132 calls and 3,092 puts.
A report from Reuters that Turkey said it has concluded after more than a year-long review that U.S. cotton imports are damaging domestic output stirred market chatter earlier this week.
The report quoted an Economy Ministry official as saying U.S. and Turkish traders are invited to send in responses to the investigative report by Feb. 24. A final report then would be drawn up “in a reasonable amount of time,” the official said, and a committee then would decide whether to advise that antidumping tariffs be imposed.
Textile mills in Turkey have strongly criticized the government probe and are opposed to any implementation of antidumping duties.
Turkey ranks as the top U.S. export customer for the season thus far, having purchased 1.16 million statistical bales or 18% of the 2015-16 sales to all destinations as of Feb. 4.
A National Cotton Council review of available price data indicates no evidence of dumping, NCC economists said at the annual industrywide convention last weekend. Ankara launched the antidumping study following U.S. investigations of imported steel products from Turkey.
TurkeyΆs textile industry, in any event, continues to face a challenging environment, NCC economists indicated in an outlook report.
Turkish mills are concerned that political unrest in neighboring countries will limit demand for their textile products, said Jody Campiche, the NCCΆs vice president of economics and policy analysis.
In late December, the government announced a 30% increase in the minimum wage, she added. While the government has announced intentions to assist companies in covering 40% of the increase, the higher wages will mean increased costs for textile mills.
The uncertainty of not knowing when or if a duty will be imposed has hurt U.S. sales, the council said. For its outlook report, the NCC assumed no duty will be imposed, saying that, for one thing, the assumption is supported by economic analysis.
Weaker grain prices are expected to increase TurkeyΆs cotton production in 2016-17, the council said, projecting a slight reduction to 3.75 million bales in the countryΆs total imports.
Futures open interest increased 2,248 lots Thursday to 207,381, with MarchΆs down 9,680 lots to 57,435 and MayΆs up 10,639 lots to 89,576. Cert stocks grew 3,501 bales to 32,629.
