Little change expected in U.S. balance sheet in USDA’s monthly supply-demand estimates. Earlier release of ginning figures set. Mostly only modest world changes may be seen, with mill use a possible kicker.
Cotton futures finished lower Tuesday, snapping a string of three higher closes in a row as traders looked ahead to USDAΆs monthly supply-demand estimates.
- May closed down 52 points to 56.86 cents, below the prior-day low and just below the midpoint of its 77-point range from down eight points at 57.30 to down 85 points at 56.53 cents. It settled a couple of ticks above its nine-day moving average.
- March expired at a 135-point premium to May, while July fell 54 points to 56.81 cents and December dropped 48 points to 56.78 cents.
- Volume slowed to an estimated 25,612 lots from 30,223 lots the prior session when spreads accounted for 154,090 lots or 47%. Options volume totaled 1,225 calls and 2,780 puts.
If USDA follows previous practice, it would make no change in its U.S. 2015-16 production estimate in the March supply-demand report set for release at 11 a.m. CST on Wednesday.
However, the end-of-season ginning report has been moved to Wednesday from March 25 last year, and the fresh data could affect the production estimate. The USDA didnΆt have new gin data available at the time and made no change in any U.S. supply-demand figures in the March 2015 report.
Final 2015-16 revisions in acreage, yield and production along with the annual ginning summary will be issued May 10.
Little change also appears generally expected this month in estimates for either U.S. mill use or exports. Both export sales and shipments strengthened in the latest USDA weekly report.
Globally, mostly only modest changes may be seen, with a possible kicker in world consumption. Some world cotton watchers insist USDA still has overstated both global mill use and production following cuts last month of 1.34 million bales and a slight 180,000 bales, respectively.
The crop in India, expected to replace China as the worldΆs largest cotton producer, now is estimated at a downwardly revised 27.5 million bales by the U.S. agricultural attach in Mumbai.
This is 300,000 bales below last monthΆs USDA forecast and 2 million bales below its estimate for 2014-15. Cotton arrivals have picked up but lag 20% from last year, the attach report said.
Trade sources report that farmers and ginners continue holding cotton from the market in anticipation of higher prices, the post said.
Total domestic consumption remains steady at an estimated at 24.6 million bales as large mills purchase cotton for short and medium term coverage, the report said. This is up 100,000 bales from the last USDA estimate.
Exports remain weak, the report said, though shipments in February were diversified into new markets. The attach export forecast is 5.5 million bales, down from USDAΆs 5.7 million bales.
The post projected IndiaΆs ending stocks at 10.97 million bales, compared with USDAΆs 11.99 million bales.
The USDA last month didnΆt change its estimate of ChinaΆs crop, leaving it at 23.8 million bales, down 21% from last season. A sizable cut had been expected.
World cotton consumption, forecast last month to decrease 0.6% from last season despite declining prices, is constrained by macroeconomic murkiness and sharply lower polyester prices. Cotton mill use was forecast to decline 3% in China and to rise slightly elsewhere.
Futures open interest grew 1,262 lots to 208,603, with MarchΆs down 38 lots to 186 and MayΆs down 1,181 lots to 121,606. Cert stocks declined 2,039 bales to 72,007. A single bale awaited review.
