ChinaΆs 2013-14 cotton imports topped USDA estimate by roughly 500,000 bales, preliminary July customs data indicated.
Cotton futures meandered to slight closing gains Tuesday, locked within tight trading spans on thin volume.
Benchmark December settled up 32 points to 64.16 cents, around the middle of a mere 52-point trading span from up four points at 63.88 to up 56 points at 64.40 cents. It had set the range for the entire session by about 6 a.m. CDT, twice touching the high after opening on the low.
Volume slowed to an estimated 9,700 lots from a final 10,304 lots the previous session when spreads totaled 2,704 lots or 26%, EFP 118 lots and EFS 100 lots. Options volume totaled 993 calls and 2,083 puts.
China imported 280,000 metric tons of raw cotton (1.286 million 480-pound bales) in July, up 6.2% from June but down 17% from a year ago, according to preliminary customs data.
Cumulative imports for the 2013-14 marketing year ended July 31 amounted to about 3.075 million tons (14.124 million bales), down from 4.426 million tons (20.33 million bales) the previous season.
The USDA earlier this month raised its estimate of ChinaΆs 2013-14 imports by 100,000 bales to 13.6 million, still roughly 500,000 bales below the total indicated by the preliminary customs data for July.
The USDAΆs World Agricultural Outlook Board has raised that estimate every month since March when ChinaΆs imports were projected at 11 million bales, same as in August 2013. Quality issues with cotton offered to mills from ChinaΆs reserve stockpile have been among the factors cited by industry analysts behind the higher-than-expected imports.
Supply-demand estimates for 2013-14 will be finalized in subsequent USDA reports as additional end-of-season data become available. U.S. exports were increased slightly to 10.53 million bales this month based on data reported by USDAΆs Foreign Agricultural Service.
Revisions in 2013-14 estimates in August also included a 100,000-bale reduction in the U.S. carryover — the beginning stocks for 2014-15 — to 2.6 million bales as data from the Farm Service Agency suggested stocks were lower than the calculation indicated by supply minus use.
Some industry analysts insist USDA also has underestimated ChinaΆs imports for 2014-15 with its forecast of 8 million bales, partly also because of the questionable quality of its huge stockpiled cotton as well as more competitive cotton prices against man-made fibers.
In its August supply-demand report, the International Cotton Advisory Committee forecast ChinaΆs 2014-15 imports at 2.2 million tons or 10.1 million bales, down about 26% from its estimate for 2013-14.
The USDA expects Beijing to limit imports in order to boost consumption of surplus domestic cotton supplies. However, USDA expects increases in several countries to help offset a portion of ChinaΆs decline, including Pakistan, Bangladesh and Vietnam.
Futures open interest fell 932 lots Monday to 165,847, with DecemberΆs down 1,257 lots to 113,055 and MarchΆs up 313 lots to 42,291. Certificated stocks declined 2,048 bales to 88,149.
World values as measured by the Cotlook A Index dropped 35 points Tuesday morning to 73.25 cents, widening the premium to MondayΆs December futures settlement by 16 points to 9.41 cents.
