The National Cotton Council projected U.S. exports this season up 100,000 bales from the USDA forecast. All-cotton bookings stand 64% above year-ago sales. Precipitation at Lubbock reported above normal.
Cotton futures settled on modest losses Tuesday, with most-active May completing an inside day and snapping a string of four consecutive higher closes.
May closed down 26 points to 77.95 cents, in the middle of its 85-point range from up 16 points at 78.37 to down 69 points at 77.52. It now has settled two days in a row above its 2016 high of 77.28 on Aug 5 after finishing above it first on Feb. 2 before closing right back below it.
March settled down 29 points to 76.32 cents, widening its settlement discount to May to 163 points and raising questions about whether deliveries will materialize on first notice day next week. July closed down 32 points to 78.73 cents and December eased a point to 74.49 cents.
Volume was estimated at 53,578 lots, down from 74,053 lots the previous session when spreads accounted for 57,346 lots or 77%, EFP 148 lots and EFS 961 lots. Options volume totaled 5,847 lots — 2,326 calls and 3,521 puts — from 13,029 lots.
Robust export demand has contributed mightily to the 2016 rally. U.S. exports this season are projected by the National Cotton Council at 12.8 million bales, up 39.3% from last season and 100,000 bales above USDAΆs latest forecast.
If the current pace of sales and shipments is maintained, the strong demand for high quality cotton could push exports even higher, the NCC said in an outlook report at the annual industrywide meeting last weekend.
All-cotton export commitments totaled 10.403 million running bales as of Feb. 2, up 4.072 million RB or 64% from a year ago, according to USDAΆs latest weekly report. Commitments were 84% of USDAΆs export estimate, compared with 71% of final shipments at the corresponding point last year.
All-cotton shipments stand at 5.532 million RB, up 2.261 million RB or 69% from a year ago and 45% of the USDA forecast. A year ago, shipments were 37% of final 2015-16 exports.
The United States will remain the largest cotton exporter with a share of 35.8%, the council said. While world trade increased slightly in 2016, the gain in U.S. market share is attributed to supply issues in other major exporting countries.
Although several bearish indicators are still in place, a lack of exportable supplies in Central Asia and West Africa coupled with IndiaΆs reduced exports is helping to support current prices, the NCC said, adding that unfixed on-call sales also are providing support.
However, the struggling global economy and man-made fiber competition underscore the challenging landscape facing cotton demand, the NCC said. Increased competition from other cotton-producing countries is expected to reduce U.S. exports next season to 12.4 million bales.
Global stocks are projected to decline by 7.7 million bales in 2017-18, with production of 105.6 million bales falling shy of 113.4 million bales of mill use. Most of the 1.5% growth in consumption is expected from China, Vietnam and Bangladesh.
Stocks outside China, however, are expected to increase by 3 million bales, with the bulk of the reduction in the world carryout linked to ChinaΆs reduced inventories. ChinaΆs increased consumption of reserve stocks has bolstered mill use this season but also has curbed its demand for imported cotton and cotton yarn.
Meanwhile, mostly light rain continued Tuesday morning in the Texas High Plains following widespread precipitation Monday.
Lubbock registered 0.87 of an inch Monday to bring its total for the year to 2.90 inches, 1.90 inches above normal. Tahoka and Lamesa, in the heart of dryland country, got 1.22 and 1.25 inches, respectively.
Futures open interest increased 974 lots Monday to 283,376, with MarchΆs down 16,685 lots to 54,492 and MayΆs up 13,735 lots to 138,065. Cert stocks grew 4,820 bales to 285,246. Awaiting review were 7,285 bales at Galveston.
