Slippage generally expected in U.S. weekly export sales. World cotton trade projected at the lowest since 2008-09.
Cotton futures finished sharply lower Wednesday, with benchmark December sliding to its lowest settlement since Sept. 16.
December shed 126 points to close at 68.48 cents, near the low of its 163-point range from up 17 points at 69.91 to down 146 points at 68.28 cents. It closed below lows of the previous three sessions after touching the high overnight and the low around 1 p.m. CDT.
March also lost 126 points, settling at 68.98 cents, while December 2017 dropped 97 points to finish at 69.37 cents.
Traders attributed the skid mostly to technically oriented selling amid favorable weather forecasts for key areas of the U.S. Cotton Belt, looming harvest pressure on seasonal tendencies and an overhang of heavy speculative longs.
Volume increased to an estimated 18,481 lots from 16,925 lots the previous session when spreads accounted for 5,286 lots or 31%, EFS 101 lots and EFP 24 lots. Options volume totaled 2,525 calls and 4,716 puts.
The USDAΆs weekly U.S. export sales-shipments report, set for release at 7:30 a.m. CDT on Thursday, is generally expected to show slippage in sales for the week ended Sept. 22.
Prices that week gained 399 points, basis December futures, and ranged from 67.04 to 72.36 cents, with closes from 67.28 to 71.71 cents. Net upland sales the previous week were 197,900 running bales, up from 136,400 RB the week before.
Upland sales the last four weeks have averaged 247,000 RB, while upland shipments have averaged 177,000 RB.
The USDAΆs forecast for world cotton trade this season of 33.9 million statistical bales is down from last seasonΆs 34.8 million and the lowest since 2008-09 when only 30.3 million bales were traded.
The lower world forecast, well below the record of 46.6 million bales exported in 2012-13, is mainly because of larger foreign production and reduced mill consumption.
Exceptions to that trend include Bangladesh, China and Vietnam, where imports and mill use are projected to expand this season.
Despite lower world import demand, U.S. exports are forecast to expand 26% to 11.5 million statistical bales, benefitting from the larger U.S. crop and reduced supplies available for export by India and Brazil.
Exports for India and Brazil are forecast to decline by a combined 2.8 million bales, while U.S. exports are expected to rise by nearly 2.4 million bales to the highest in four seasons.
U.S. exports are projected to account for 34% of world cotton exports, up from 26% last season and the largest share since 2010-11 when it was 41%.
Futures open interest dipped 94 lots Tuesday to 253,355, with DecemberΆs down 751 lots to 185,860 and MarchΆs up 764 lots to 54,136. Certified stocks grew 470 bales to 32,084.
