Cotton Finishes With Modest Gains

Production estimates reviewed. GeorgiaΆs 2.2-million-bale crop projected last month to account for more than half the six-state SoutheastΆs production.

Cotton futures pushed to a new 13-session high and finished with modest gains Tuesday, trading within tight ranges on slowed dealings.

Benchmark December settled up 21 points to 62.08 cents, just above the midpoint of its 62-point range from down 16 points at 61.71 to up 46 points at 62.33. It posted the highest intraday print since Sept. 18 and highest close since Sept. 17. March closed up 17 points to 61.85 cents.

Volume slowed to an estimated 16,700 lots from 29,557 lots the previous session when spreads accounted for 8,050 lots or 27%. Options volume totaled 2,796 calls and 2,174 puts.

The USDA isnΆt expected to have had time to fully quantify the impact of recent heavy rains and flooding in parts of the Southeast, heavily concentrated in South Carolina, in its updated U.S. production estimate on Friday. Quality also is reported to have been hurt in the heavier rainfall areas.

Production in the Southeast last month was forecast at 4.205 million bales, a million bales below last season. The cotton area — 2.201 million acres — is the lowest since 2009, but the yield of 917 pounds was forecast at the third highest on record.

More than half the six-state regionΆs cotton crop was expected to come from GeorgiaΆs 2.2-million-bale output, with South Carolina accounting for 420,000 bales, North Carolina for 705,000 bales and Virginia for 190,000 bales.

As of Sunday, 8% had been harvested in Georgia, behind the five-year average of 12%, with 12% off the stalk in South Carolina, 6% in North Carolina and 2% in Virginia.

In the Delta where the harvest has been gaining momentum, the crop was projected at 2.22 million bales, the smallest since 1983. Favorable crop alternatives reduced the cotton area by a third to less than a million acres, an all-time low, but the regionΆs yield — 1,131 pounds — was forecast to hit a record for the fourth consecutive season.

The crop in the Southwest, projected at 6.062 million bales, would be only about 400,000 bales below the 2014 output, despite the lowest planted area since 1989. Beneficial growing season rainfall has kept abandonment low, forecast at 6%, against the five-year average of 36%.

As a result, acres-for-harvest in the Southwest at 4.71 million were expected to be near last seasonΆs acreage, while the yield estimate of 618 pounds was down from the five-year average of 642 pounds.

Most analysts expect an upward adjustment in the crop estimate for the Texas High Plains, which was forecast to harvest 3.95 million bales, 69% of the statewide output and 31% of the U.S. upland crop.

In the West, the upland crop projection of 490,000 bales fell 36% from last yearΆs production. The area declined for the fourth year in a row and the yield at 1,479 pounds was down from last yearΆs record but near the five-year average.

The U.S. upland production forecast of 12.977 million bales was 17.5% below the 2014 crop and 2.4 million bales below the five-year average.

During the previous 20 years, the September upland cotton forecast was below the final bale count 11 times and above it nine times. Past differences between the September forecast and the final number indicate that chances are two out of three that 2015 production will range between 12.1 million and 13.8 million bales.

Futures open interest expanded 1,515 lots to 190,003 on MondayΆs upside breakout, with DecemberΆs up 163 lots to 122,964 and MarchΆs up 862 lots to 48,713. Cert stocks declined 517 bales to 44,326.