China Cotton Association left its estimate of the 2013-14 output at 6.77 million metric tons or 31.09 million bales, down from USDAΆs January forecast of 33 million bales.
Cotton futures eked out small closing gains Tuesday to snap a string of four consecutive lower settlements.
Spot March settled up 10 points to 84.35 cents, around the lower third of its 97-point range from 84.02 to 84.99 cents. It remained within MondayΆs 350-point trading range.
The May contract edged up 14 points to close at 84.85 cents, July rose 17 points to 84.93 cents and December gained 24 points to 76.91 points. Relative macro-economic calm aided the bounce.
Volume slowed to an estimated 21,010 lots from 41,564 lots the previous session when March turnover alone accounted for a whopping 27,931 lots, spreads for 14,009 lots or 34%, block trades for 248 lots and EFP for eight lots. Options volume totaled 7,352 calls and 4,141 puts.
The China Cotton Association is reported to have left its estimate of 2013-14 output in the worldΆs largest cotton producer unchanged on the month at 6.77 million metric tons (31.094 million 480-pound bales).
This compares with earlier estimates of 6.71 million tons (30.819 million bales) by Beijing Cotton Outlook, 6.7 million tons (30.773 million bales) by Cotton Outlook and a much smaller 6.31 million tons (28.982 million bales) by the National Bureau of Statistics.
In its January supply-demand estimates, USDA put the output at 33 million bales, up a surprising million bales from its December forecast and down 2 million bales from its estimate of the 2012-13 output.
The CCA and Beijing Cotton Outlook both have projected a decline of around 9% in their initial projections of the 2014 cotton area.
Those estimates, however, were made before confirmation of ChinaΆs policy shift to a pilot direct subsidy program for 2014-15 in the largest cotton province of Xinjiang and no indication of a replacement support plan in the other cotton provinces.
Meanwhile, some businesses in China have begun closing for the Lunar New Year holiday, which begins Friday. The Chinese New Year is described as the longest and most important celebration in the Chinese calendar.
Reserve auctions and procurement actions have been suspended and will resume Feb. 7 and Feb. 17, respectively.
ChinaΆs Zhengzhou cotton futures and the China National Cotton Exchange will remain open through Thursday and then close until Feb. 7.
The strategic reserves in China now are estimated at slightly more than 12.5 million tons (57.4 million bales).
Futures open interest fell 2,849 lots Monday to 185,789, with MarchΆs down 3,137 lots to 104,151 and MayΆs up seven lots to 41,393. Open interest as of Friday had reached the highest since Nov. 7.
Certificated stocks grew 2,200 bales to 76,075, with 2,641 bales awaiting review, all at Greenville.
World values as measured by the Cotlook A Index fell 270 points Tuesday morning to 91.05 cents. The index premium to MondayΆs March futures settlement widened 26 points to 6.80 cents.
March corn ended slightly higher and March soybeans ended lower Tuesday in a quiet trading session after Argentina received beneficial rain overnight. March Chicago wheat ended modestly higher with help from EgyptΆs purchase of 60,000 metric tons of soft red winter wheat and cold weather concerns for winter wheat crops in the U.S. and Russia.
