Maturing May hit new contract high. Decline generally expected in U.S. weekly upland export sales for shipment this season. Projected higher proportion of acres in Southwest seen as playing key new-crop role.
Cotton futures finished mixed Wednesday, with most-active July settling little changed ahead of USDAΆs weekly export sales report.
July inched up three points to close at 79.39 cents, in the upper half of its 103-point range from up 38 points at 79.74 cents to down 65 points at 78.71 cents. It touched a 27-session high and got within 53 points of its contract high before closing even with last weekΆs high.
Maturing May eased two points to close at 80.69 cents, trading within a 55-point range from a new contract high at 81.20 to 80.65 cents. December settled flat at 75 cents, trading within a 45-point range from 75.16 to 74.71 cents.
October, the only contract to settle on a gain other than July, closed up 52 points to 76.62 cents. The rest of the board finished down seven to 46 points.
Volume rose to an estimated 25,914 lots from 21,326 lots the prior session when spreads accounted for 7,129 lots or 33%, EFP 50 lots and EFS nine lots. Options volume declined to 2,326 lots (836 calls and 1,490 puts) from 7,612 lots (3,246 calls and 4,366 puts).
Tightening U.S. supply availability is expected eventually to contribute to a sharp slowdown in weekly current-crop export sales, though expectations also are for an increase in USDAΆs 2016-17 export forecast in the next monthly update.
And the report on Thursday generally is expected to show sales for the week ended April 20 below the prior weekΆs 226,300 running bales of upland for shipment this season.
Net upland export sales for 2016-17 have totaled 1.196 million RB the last four weeks for a weekly average of 298,900 RB, while upland shipments have totaled 1.638 million RB for an average of 409,600 RB.
An increase in the export estimate would be expected to result in lower U.S. 2016-17 ending stocks from the current forecast of 3.7 million bales, down 100,000 bales from last season and a million bales below the initial projection last May.
Competing for attention with the 2016-17 balance sheet estimates in the May 10 report, which will include USDAΆs final production figures, will of course be the initial 2017-18 forecasts.
The U.S. 2017-crop projection will be based on the March planting intentions, which will be updated at the end of June in the National Agricultural Statistics ServiceΆs estimate of the planted area.
Producer intentions reported last month of 12.23 million acres — up more than 2 million acres or 21% from last year — included an increased proportion in the Southwest, which is prone to highly variable yields.
The projections indicated that reduced corn, sorghum and wheat acreage would push the regionΆs upland plantings to 7.4 million acres, up about 1.4 million acres or 24% from 2016 and the second largest in more than three decades. The region again will play a key role in U.S. 2017 cotton production, USDA has noted.
The Southwest is projected to account for 62% of the U.S. upland acreage in 2017, up from 59.8% last year and the highest percentage in more than a century. The five-year average yield in the Southwest is 626 pounds per harvested acre, compared with 871 pounds in the Southeast, 1,012 pounds in the Mid-South and 1,496 pounds in the West.
Projections showed the Southeast accounting for 21% of the U.S. upland acreage on plantings near that regionΆs 10-year average, the Delta for 15% on its largest cotton area in five years and the West for only 2% on its largest upland area in four years.
Futures open interest increased 2,744 lots Tuesday to 247,883, with MayΆs down 30 lots to 396, JulyΆs up 1,412 lots to 133,695 and DecemberΆs up 1,565 lots to 100,213. Cert stocks grew 307 bales to 299,098. Awaiting review were 2,319 bales — 1,177 at Galveston and 1,144 at Memphis.
