Modest increase expected in U.S. export estimate for 2012-13. U.S. upland growers booked 11% of their expected acreage by June 1.
Cotton futures rallied from a shallow dip as spot July powered to a three-week intraday high in still-brisk dealings Monday and inverted to a settlement premium over December.
The July contract closed up 179 points to 86.65 cents, near the high of its 231-point range from down 27 points at 84.59 to up 204 points at 86.90 cents. It came within a tick of the May 20 intraday high and settled at its highest close since May 14.
December closed up 70 points to 85.88 cents, nine ticks off the high of its 119-point range from down 24 points at 84.78 to up 95 points at 85.97 cents. This was DecemberΆs highest close since May 17.
July jumped to a premium in the face of the second day of the big Goldman Sachs index fund roll of longs from the front contract, selling July and buying December, with commercials believed likely on the other side as they rolled or covered shorts with mills fixing on-call prices.
Some speculators also may have covered shorts established in bear spreads when they expected the July discount would widen with the index fund rolling of longs into December. First notice day for July now is 10 sessions ahead and the last trading day for July options is Friday.
Volume slipped to an estimated 40,788 lots from 45,218 lots the previous session when spreads totaled 31,037 lots or 69% and EFP 499 lots. Options volume increased to 12,164 lots — 4,391 calls and 7,773 puts.
A modest increase appears generally expected in U.S. 2012-13 exports in USDAΆs supply-demand estimates on Wednesday. Few other U.S. changes are expected, though an analyst said market action lately would seem to smack of a bullish surprise.
The USDA is considered unlikely to tinker with the U.S. 2013 planted area estimate prior to the June 28 report on planted acreage, though it may or may not adjust estimates on acres for harvest and production.
Meanwhile, U.S. upland growers had booked about 11% of their expected acreage by June 1, up a percentage point from a month earlier and two points from a year ago, USDA reported.
Forward contracting was down from 28% in 2011 and 10% in 2010 but up from only 2% in 2009. The estimates donΆt include cotton consigned to marketing organizations but do include cotton contracted with them.
By regions, contracting included 29% in the Southeast, up from 11% a year ago; 16% in the Mid-South, down from 29% in 2012; 2% in the Southwest, even with last year; and 2% also in the West, down from 4% by June 1 a year ago.
The estimates are based on the March prospective plantings report by the National Agricultural Statistics Service and informal surveys by the cotton division of USDAΆs Agricultural Marketing Service.
Futures open interest expanded 3,651 lots Friday, with JulyΆs down 5,290 lots to 80,193 and DecemberΆs up 8,672 lots to 83,778. This marked the first time that DecemberΆs OI has exceeded JulyΆs.
Certificated stocks grew 2,750 bales to 527,774. There were 2,838 newly certified bales, 88 bales decertified and 14,381 bales awaiting review.
The Cotlook A Index of world values was unchanged Monday morning at 93.20 cents, widening the premium to FridayΆs July settlement by a point to 8.34 cents.
