World price barometer projected at 2013-14 average of 115 cents if Chinese reserve policy continues as announced, up from 88 cents estimated for 2012-13, ICAC says. Cotton production decade reviewed.
Cotton futures extended a strong rebound Tuesday from the longest skid in three years, again led by a surge in spot July in heavy dealings.
July settled up 220 points to 84.56 cents, in the upper half of its wide 458-point range from down 56 points at 81.80 to up 402 points at 86.38 cents. It posted the highest intraday price and highest close since May 20.
December closed up 112 points to 85.44 cents, also its highest finish since May 20 and in the upper third of its 333-point range from down 124 points at 83.08 to up 209 points at 86.41 cents.
A nine-day losing streak in the spot delivery through Friday — longest since June 2010 — appeared to have stimulated commercial interest in the certificated stocks, traders said, even as the stocks have continued to grow. Spreading remained active amid rolling from July, and short-covering continued.
Volume jumped to an estimated 52,800 lots from 36,220 lots the previous session when spreads totaled 14,004 lots or 39%, EFP 456 lots and EFS 15 lots. Options volume totaled 10,547 calls and 2,643 puts.
World values as measured by the Cotlook A Index fell to around 90 cents as the end of May approached, while the China Cotton Index fell to 19,350 yuan per metric ton or 142 cents per pound, the International Cotton Advisory Committee says in a monthly report.
Assuming the current Chinese reserve policy continues as announced, ICAC said, the index is projected to average 115 cents in 2013-14. This is down 7 cents from the ICAC projection a month ago but up from 88 cents still foreseen for 2012-13.
The ICAC raised its world production forecast for 2013-14 by 2.21 million bales on the month and nudged its consumption estimate up 270,000 bales to 111.65 million. World trade rose by 640,000 bales to 41.52 million and ending stocks by 1.79 million bales to 85.61 million.
Overall, ICAC said, planting in the Northern Hemisphere is progressing well on an estimated 29.8 million hectares (one hectare equals 2.471 acres) of cotton area forecast for 2013-14.
Cotton planting in China is almost complete, ICAC said. All planting was expected to be completed by the first week of June. Chinese planted area is projected at 4.6 million hectares, a 15% reduction from 10 years ago, and production at 6.7 million tons (30.8 million 480-pound bales), second lowest crop in a decade.
In India, planting has been normal, ICAC said, but added that the monsoon will determine if last seasonΆs area can be maintained in the worldΆs second largest producing nation after China.
A record cotton area of 11.9 million hectares is foreseen for India for 2013-14, up 51% from 2003-04, and production is projected at 6.2 million tons (28.5 million bales), more than double the 3 million tons of production (13.8 million bales) of 10 years ago.
In the United States, the worldΆs third largest producer and top cotton exporter, the USDAΆs projections earlier this month of a harvested area of 8.4 million acres and a crop of 14 million bales were down 30% and 23%, respectively, from 10 years ago.
For Pakistan, ICAC projected the 2013-14 cotton area at 2.9 million hectares and production at 2 million tons (9.2 million bales), about the same as the previous season and similar to the 10-year average.
Futures open interest fell 1,394 lots Monday to 178,889, with JulyΆs down 2,363 lots to 94,113 and DecemberΆs up 876 lots to 77,376.
Certificated stocks grew 538 bales to 518,325. Awaiting review were 13,059 bales.
The Cotlook A Index gained 270 points Tuesday morning to 91.50 cents, narrowing the premium to MondayΆs limit-up close in July futures by 30 points to 9.14 cents. The index premium had widened steadily from 7.57 cents near the end of April.
