U.S. ending stocks projection expected to be cut to about 2.5 million bales, reflecting a reduced crop estimate as indicated by ginning figures last month and unchanged offtake forecasts.
Cotton futures settled higher Tuesday, bolstered partly perhaps by expectations for a tightened U.S. balance sheet in USDAΆs monthly supply-demand estimates.
Spot May closed up 117 points to 91.79 cents, in the upper half of its 187-point range from down five points at 90.57 to up 182 points at 92.44 cents. It traded inside the prior-session range on this second day of the five-day Goldman Sachs index fund roll.
July gained 124 points to close at 92.41 cents and December rose 33 points to finish at 80.17 cents, above last weekΆs high and its highest settlement since March 25.
Volume slipped to an estimated 29,900 lots from a final 34,761 lots the previous session when spreads totaled 21,839 or 63%, EFP 45 lots and EFS 16 lots. Options volume totaled 3,047 calls and 2,771 puts.
U.S. ending stocks are expected to be reduced by about 320,000 bales from a month ago to 2.48 million or a rounded 2.5 million, among the smallest since 1990, in the USDA report due 11 a.m. CDT on Wednesday.
The USDA is expected to cut the crop estimate to 12.867 million bales from the previous 13.187 million bales. This would adhere to USDAΆs previous practice of adjusting its April crop estimate on the basis of the March end-of-season ginning figures.
Estimates on demand are expected to be largely unchanged. The carryout then would be down 1.4 million bales from a year earlier and the total supply — including beginning stocks — would drop to 16.767 million bales. This would keep the supply the smallest in 29 years.
The export estimate was raised 200,000 bales last month to 10.7 million, and shipments in recent weeks have maintained a pace above the weekly average needed to reach the forecast.
Shipments typically decrease toward the end of the season, USDA analysts have pointed out, especially with ending stocks estimated below 3 million bales.
Export sales, though having slowed markedly four straight weeks, also have continued at or above the average required to match the estimate on just a bale-for-bale basis by July 31.
With 17 weeks left in the marketing year, outstanding sales plus shipments as of March 27 totaled about 92 percent of the export projection — shy by roughly 861,000 statistical bales.
Domestic mill consumption has been running above year-ago levels and is projected at 3.6 million bales, largest in three years.
The total offtake estimate of 14.3 million bales is down 2.23 million bales from last season and the smallest combined exports-domestic mill consumption since 1987.
The final 2013 crop report on May 9 will contain further revisions, usually minor tweaking, on acreage, yield and production. An annual ginning summary also will be issued at that time.
The USDAΆs World Agricultural Outlook Board also will issue its first official estimates for 2014-15 on May 9.
Futures open interest fell 1,523 lots Monday to 183,064, with MayΆs down 6,670 lots to 75,428, JulyΆs up 3,812 lots to 59,559 and DecemberΆs up 1,235 lots to 43,571.
Certificated stocks grew 496 bales to 265,894 bales on 501 newly certified bales and five decertified bales. Those are the largest deliverable stocks since July.
World values as measured by the Cotlook A Index fell 175 points Tuesday morning to 93.85 cents. The premium to MondayΆs May futures settlement widened three points to 3.23 cents.
The Forward A Index for 2014-15 was unchanged on the day at 88.45 cents, a 540-point discount to the current-crop index. Cotlook introduced the forward index on Friday at 88.05 cents, a 665-point discount to the 2013-14 quotes.
