U.S. crop estimate cut, world production forecast boosted and global carryout projection raised nearly a million bales. India reported to have deferred decision on cotton export duty.
Cotton futures finished with a modest gain Thursday, rallying from an initial knee-jerk sharp setback immediately after release of the USDA crop and supply-demand estimates.
Benchmark December settled up 40 points to 84.75 cents, a new high close since Aug. 26. It traded within a 130-point range from down 70 points at 83.56 cents to up 51 points at 84.86 cents. October finished up 108 points to 85.88 cents and March gained 54 points to 84.43 cents.
December posted the session high just before release of the USDA report, skidded to the low below WednesdayΆs low right after the report, and rallied to settle near the dayΆs high.
Volume quickened to an estimated 17,400 lots from 13,202 lots the previous session when spreads totaled 5,916 lots or 45% and EFP 10 lots. Options volume totaled 4,095 calls and 2,721 puts.
U.S. all-cotton production prospects fell 150,000 bales from a month ago to 12.9 million bales. The planted area was revised up 140,000 acres to 10.34 million and acres for harvest edged up 80,000 to 7.78 million.
Yield prospects fell 17 pounds to 796 pounds per harvested acre, down 91 pounds from last season and 21 pounds below the five-year average.
Beginning stocks rose by 100,000 bales to 3.9 million based on revised data for 2012-13, while domestic mill use remained at 3.5 million bales but exports fell 200,000 bales to 10.4 million owing to the smaller crop and increased competition for market share, mainly from India.
U.S. stocks edged up 100,000 bales to 2.9 million, representing a relatively tight 20.9% of total offtake, compared with August forecast of 19.9% and 23.6% in 2012-13.
The USDA lowered its forecast range for the crop year average producer price by 3 cents on each end to 69 to 85 cents, reflecting recent market activity and prospects. The midpoint fell to 77 cents from 80 cents foreseen in August but was up from an average of 72 cents season.
Upland production prospects declined 200,000 bales to 12.273 million and prospective Pima output rose by 46,000 bales to 626,000 bales.
By regions, upland crop estimates increased 63,000 bales to 4.514 million in the Southeast, fell 235,000 bales to 2.465 in the Mid-South, edged up 39,000 bales to 4.409 million in the Southwest and dipped 67,000 bales to 885,000 in the West.
Globally, ending stocks climbed 960,000 bales to 94.73 million, with ChinaΆs carryout up a slight 50,000 bales to 58.31 million, still 62% of the world total.
World production rose by 1.04 million bales to 117.42 million on improved crop prospects for India, Brazil and Greece, partly offset by reductions in the United States and Syria. A small 320,000-bale decrease to 109.53 million in consumption included reductions for India and South Africa, partly offset by increases for Indonesia and Turkey.
Higher estimated world trade reflected increases in both imports and exports for India as well as larger imports for Indonesia and Turkey.
The USDA left the China balance sheet largely unchanged this month, based on currently announced reserve, release and import quota policies for 2013-14.
Meanwhile, reports indicated India has deferred a decision on a plan to slap a 10% duty on cotton exports. The proposal was intended to boost export sales of value-added textiles to take advantage of a weak rupee and help reduce a growing current account deficit.
Futures open interest edged higher a second straight session Wednesday, rising 490 lots to 169,786, with DecemberΆs down 229 lots to 118,658 and MarchΆs up 792 lots to 38,590. Certificated stocks were unchanged at 18,028 bales. Awaiting review were 2,296 bales.
World values as measured by the Cotlook A Index dipped 15 points Thursday morning to 89.85 cents. The premium to WednesdayΆs December futures settlement narrowed three points to 5.50 cents.
