By Duane Howell DTN Cotton Correspondent
U.S. crop projected at 20.55 million bales, largest in 11 years, USDA says. Ending stocks forecast at 5.8 million bales, a million bales more than expected. Global carryout estimated at 90.09 million bales.
Cotton futures tumbled to 300-point daily limit and near-limit losses Thursday on a much larger-than-expected U.S. crop forecast, sharply higher global production and a buildup in world stocks outside China this season.
December closed limit down at 68.11 cents, its lowest finish since it also settled at that price on July 19 and down from the session high of 71.19 cents. March settled down 293 points to 67.83 cents, just off the low of its 304-point range from 70.81 to 67.77 cents. October lost 256 points to close at 69.26 cents.
Volume jumped to an estimated 43,800 lots from 19,415 lots the prior session when spreads accounted for 8,738 lots or 45% and EFP 147 lots.
The first survey of U.S. 2017 crop production points to an output of 20.55 million bales, up 1.5 million bales from last month and the largest production in 11 years, USDA said.
Lower beginning stocks, which were cut 400,000 bales to 2.8 million on an increase in final 2016-17 exports to 14.92 million bales, partially offset the larger crop. Domestic mill use for 2017-18 was lowered 50,000 bales to 3.35 million, but exports were raised 700,000 bales to 14.2 million on the larger supply and strong early season commitments.
Ending stocks now are projected at 5.8 million bales, up 500,000 bales from a month ago and a million bales above expectations reported in a survey of cotton analysts by The Wall Street Journal. The USDA crop forecast came in far above the survey average estimate of 18.83 million bales.
If realized, the ending stocks would be the largest since 2008-09 when the carryover was 6.34 million bales. The projected stocks-to-use ratio of 33%, up from 31.4% foreseen last month, also would be the highest since 2008-09 when it was 37.7%.
The U.S. all-cotton planted area remained at the June estimate of 12.06 million acres, while the harvested area was lowered to 11.05 million acres from 11.18 million forecast month. This reflects an abandonment rate of 8.4%.
All-cotton yields are expected to average 892 pounds per harvested acre, up from 816 pounds estimated last month, 867 pounds last season and the five-year average of 839 pounds.
The forecast range for the marketing year average price received by producers of 55 to 67 cents per pound was narrowed a cent on each end, with the midpoint unchanged at 61 cents, down from 68 cents in 2016-17.
Globally, production prospects rose by 1.95 million bales on the month to 117.31 million, with ending stocks rising 1.36 million bales to 90.09 million. Ending stocks in the world outside China now are expected to rise by 9.15 million bales from beginning stocks to 50.74 million.
The crop forecast for China rose by 500,000 bales to 24.5 million, mainly on larger area, and mill use for the world’s largest cotton consumer also rose by 500,000 bales to 38.5 million.
World cotton consumption is forecast up 375,000 bales from a month ago — largely because of the increase for China — to 117.4 million. At 3.3%, growth in world cotton consumption in 2017-18 is projected at its highest rate in five years.
World ending stocks of 90.09 million bales, up 100,000 bales from 2016-17, are 76.7% of expected consumption, compared with 75.8% forecast in July and 79.2% in 2016-17.
Futures open interest grew 2,454 lots to 221,546 on Wednesday, with December’s down 126 lots to 151,735 and March’s up 2,259 lots to 49,156. Certified stocks declined 612 bales to 19,523.