Cotton Finishes on New High Close Since Aug. 21

U.S. upland classing topped a million bales for the week as the tenderable percentage continued to slip. World cotton production and consumption estimates cut by ICAC. Upland cotton under loan rose to 2.442 million bales.

U.S. cotton futures pushed through resistance at the October high to finish Friday at its highest settlement since Aug. 21 in benchmark March.

March gained 76 points to close at 64.71 cents, near the high of its 114-point range from down 20 points at 63.75 to up 94 points at 64.89 cents. It took out the Oct. 22 high of 64.50 cents and advanced 78 points for the week, its fourth weekly gain in a row.

Maturing December settled up 137 points to 63.23 cents, May closed up 66 points to 65.28 and December 2016 finished up 30 points to 65.50 cents.

Volume increased to an estimated 27,600 lots from 25,813 lots the previous session when spreads accounted for 5,984 lots or 23%, EFS 2,000 lots and EFP 62 lots. Options volume totaled 7,443 calls and 3,094 puts.

World cotton futures advanced 91 points to close at 73.47 cents in the May delivery, widening the premium over the U.S. May futures settlement by 25 points to 8.19 cents. Only three lots traded.

On crop scene, U.S. upland classing quickened to a marketing year high of 1.017 million running bales during the week ended Thursday, boosting the total for the season to 7.715 million.

Cotton meeting quality requirements for tendering on U.S. futures continued to slip, dipping to only 52.4% for the week and 56.4% for the season. A year ago, 72.4% classed for the season was tenderable.

The recent flurry of mill buying may have been linked partly to concerns about quality of the 2015 crop, some trade analysts say.

Upland cotton classed for the season amounted to 62% of USDAΆs November crop estimate. The total lagged 24% behind the 10.161 million bales graded a year ago when 67% of the final output had been classed.

Classing of 34,066 bales of Pima hiked the extra-long staple total for the season to 263,707, down from 348,992 a year ago. The all-cotton total of 7,979,144 RB compared with 10,509,074 RB last year.

In December supply-demand estimates converted to statistical 480-pound bales from metric tons, the International Cotton Advisory Committee cut world production to 106.15 million from 109.86 million foreseen a month ago and lowered consumption to 111.93 million from 115.05 million.

The world ending stocks estimate dipped to 94.85 million bales from 95.21 million, with the 2015-16 carryout representing about 85% of the projected global mill use.

World consumption now is forecast up less than 1% from 2014-15. With consumption slowing, world cotton imports are forecast to decline by 3% to 33.76 million bales. This would mark the fourth consecutive season in which imports declined after peaking at 45.01 million bales in 2011-12.

The ICAC forecast world cotton values as measured by the Cotlook A Index at a 2015-16 average of 70 cents, down from 73 cents foreseen last month, 71 cents in 2014-15 and 91 cents in 2013-14.

Meanwhile, U.S. upland outstanding loans increased by 366,247 bales to 2.442 million during the week ended Monday, according to the latest USDA figures.

Entries were 388,664 bales and repayments were made on 22,417 bales. Upland bales under loan included 222,406 of Form A issued to individual growers and 2.226 million of Form G issued to marketing cooperatives or loan servicing agents.

U.S. futures open interest grew 2,994 lots Thursday to 186,376, with DecemberΆs down 11 lots to 10, MarchΆs up 2,673 lots to 140,122 and MayΆs up 196 lots to 26,419. Cert stocks declined 286 bales to 65,182. There were 66 newly certified bales, 352 decertified bales and 176 bales awaiting review.

The U.S. cert stocks included 18,300 bales which are eligible for delivery on the world cotton futures contract. All the world cert stocks are in U.S. warehouses.