U.S. weekly export sales generally expected to remain above the pace required to meet USDAΆs shipments estimate.
Cotton futures opened flat overnight, jumped to a triple-digit gain early morning and settled midrange Wednesday above the prior-session high.
Spot March closed up 79 points to a three-session high finish at 70.13 cents, trading within a 158-point range from 69.34 to 70.92 cents. It closed 80 points above TuesdayΆs low but still below its declining nine-day moving average.
The May contract gained 71 points to settle at 70.48 cents, while December 2017 advanced 50 points to finish at 69.13 cents.
Volume quickened to an estimated 30,903 lots from 19,939 lots the previous session when spreads accounted for 6,571 lots or 33%, EFP 166 lots and EFS 20 lots. Options volume totaled 2,782 calls and 4,257 puts.
U.S. net weekly export sales to be reported Thursday generally are expected to remain above the pace required to meet USDAΆs export estimate, though a slowdown from the prior weekΆs 311,700 running bales of upland wouldnΆt be particularly unexpected.
Net upland sales the last four weeks have totaled a bulging 1.117 million RB for an average of 293,500 RB. Shipments, however, have lagged the required pace even after upland exports the prior week of 218,400 RB topped the latest four-week average of 177,900 RB.
Global cotton trade is forecast similar to the previous two seasons, with the U.S. share expected to reach 34.5%, up from 26% last season. A larger, higher quality U.S. crop is expected by USDA to push exports to 12.2 million statistical bales, a third higher than last season and the largest since 2012-13.
World cotton trade is projected at 35.3 million bales, marginally above 2015-16 and equal to 2014-15 but well below 2012-13Άs record 46.4 million bales.
The steady but limited world trade is largely attributable to the relatively low raw cotton import demand from China, USDA says, as the government imposed tighter import controls in order to reduce domestic surpluses. Imports also have been limited by mills in China having access to government-held stocks.
Despite the overall stable trade, the major cotton exporters have experienced considerable annual variations.
A larger and higher quality crop in Australia is expected to join U.S. cotton in capturing a larger share of the market than in 2015-16. In contrast, cotton shipments from India, Brazil and Uzbekistan are expected to decline owing to lower supplies available for export.
Some analysts have wondered if U.S. export sales are being front-loaded and may face significant slowing against increasing competition later, especially from Australian and West African new-crop supplies, while others have contended the export estimate still is understated.
Futures open interest fell 3,466 lots Tuesday to 243,889, with MarchΆs down 3,505 lots to 166,463 and MayΆs down 372 lots to 41,567. Cert stocks declined 23,804 bales to 50,273.
