Cotton futures tumbled to sharp closing losses Monday as benchmark December skidded to a new contract low finish.
December lost 180 points to close at 62.59 cents, in the lower quarter of its 218-point range from up a point at 64.40 to down 217 points at 62.22 cents. The intraday low was within 20 points of the contract low set on Aug. 1.
Thinly traded October, where first notice day arrives on Wednesday, closed off 113 points to 64.86 cents and March settled down 234 points at 61.95 cents.
Volume rose to an estimated 28,600 lots from 23,796 lots the previous session when spreads totaled 4,951 or 21%, EFS 25 lots and 7 EFP. Options volume totaled 5,145 calls and 7,650 puts.
The market fell mainly on news that China, the worldΆs largest cotton consumer, wonΆt offer additional general import quota in 2015 beyond the minimum tariff rate quota required by its World Trade Organization commitment. The minimum is 894,000 metric tons or about 4.1 million 480-pound bales.
However, the announcement reportedly doesnΆt rule out the possibility that the government may accept applications for additional processing trade quota if value-added goods made from the imported cotton are re-exported.
Mills also apparently will be able to import cotton by paying the full duty, 40%, applied to non-quota cotton. The prices of foreign growths versus the internal prices would determine whether this is feasible, analysts said.
The goal is to encourage the use of domestic cotton as Beijing seeks to reduce the governmentΆs huge strategic reserves accumulated under the three-year stockpiling program now being scrapped.
Contrary to earlier reports that the new target price program would be limited to Xinjiang producers, the announcement indicated subsidies also would be offered to growers in other areas.
A sharp decline expected in world trade this season has been largely attributable to projections of steep cuts in ChinaΆs imports, which are forecast by USDA at 8 million bales, against 14.12 million bales last season.
However, increased imports in several other countries are expected to help offset a portion of ChinaΆs decline, including Pakistan, Bangladesh and Vietnam. World imports are projected by USDA at 35.19 million bales, down about 13% from last seasonΆs 40.36 million bales.
Meanwhile, up to a foot of rain has fallen in some areas of the Texas High Plains in recent days, with Lubbock having recorded at least some rainfall for 11 consecutive days. Lubbock has received 4 inches for the month, boosting its total for the year to 15.90 inches, up from 9.86 inches last year and the normal of 14.87 inches.
A protracted lack of sunshine and temperatures gyrating from a record high record high maximum of 104 degrees on Sept. 1 to a low of 47 degrees on Sept. 13 have contributed to concerns about the possibility of low-micronaire readings, a measure of fiber fineness or maturity, which also can affect the weight of bolls and yields.
The rains, however, will help to build a subsoil base for next yearΆs crop. Lack of subsoil moisture contributed to a decline in what had been some promising dryland crop prospects in August.
Forecasts rate diminished rain chances in the Lubbock area at 30% Monday and 20% Tuesday through Thursday. Mostly sunny skies arenΆt expected to return until Friday. Temperatures are forecast mostly from the high 70s to low 80s for daytime highs to around 60 to the high 50s for nighttime lows.
Futures open interest fell 550 lots Friday to 23,796, with DecemberΆs down 1,978 lots to 106,388 and MarchΆs up 1,175 lots to 56,504. Stocks in deliverable position declined to 20,461 bales.
World values as measured by the Cotlook A Index fell 65 points Monday morning to 72.85 cents, widening the premium to FridayΆs December futures settlement by a point to 8.46 cents.
