Only soon-to-mature December closed in the red. Internal estimate that ChinaΆs crop could fall 1.82 million bales below the USDA forecast contributed to a big overnight rally.
Cotton futures settled mixed Wednesday, up 58 points to 78.14 cents in most-active March and down 25 points in the only loser to 75.63 cents in soon-to-mature December.
March finished in the lower third of its 183-point range from up six points at 77.62 to up 189 points at 79.45 cents. Dollar index strength may have contributed to trimming gains from the big overnight rally.
December settled on a new low for the move, reversing from a 156-point gain to a four-session high at 77.44 to down 50 points at 75.38 cents. It held above the intraday low for the move at 75.27 on Nov. 5.
Volume climbed to an estimated 27,300 lots from 21,603 lots the previous session when spreads totaled 11,496 lots or 53%, EFP 769 lots and EFS six lots. Options volume totaled 568 calls and 2,031 puts.
Reports that ChinaΆs cotton production could fall to 6.68 million metric tons or 30.68 million 480-pound bales contributed to powering the market to session highs in overnight dealings.
This would be 1.82 million bales below the USDA estimate earlier this month. The USDA shaved the estimate 500,000 bales from its September forecast and has pegged ChinaΆs 2012-13 output at 35 million bales.
The new internal estimate from the China National Cotton Reserves Corp. was published on an industry website, cottonchina.org, and may have contributed to strong gains in ChinaΆs inverted Zhengzhou cotton futures.
Early frost, rain and snow were reported to have reduced yields in the northern area of Xinjiang, the countryΆs top cotton-producing region, by 20%. Quality also has been adversely affected.
Lower yields, rising production costs and uncertainty about ChinaΆs cotton policy prompted reports that growers in some areas may switch land from cotton to grains next year.
About 88% of the countryΆs expected production had been harvested by the end of October and about 57% had been sold, according to the China Cotton Association.
ChinaΆs purchases of the 2013-14 output were reported to have reached 2.16 million tons or 9.92 million bales by Nov. 15, down about 16% from procurements through the corresponding period last season. Reserve stocks were estimated this week at 9.712 million tons or 44.61 million bales.
The smaller crop contributed to the reduced stockpile purchases, the CNCRC said. No announcement was made on a resumption of stockpile sales, and speculation arose that the sales might be delayed or suspended.
Futures open interest fell 3,654 lots Tuesday to 159,731, with DecemberΆs down 5,592 lots to 8,724 and MarchΆs up 1,127 lots to 112,529.
Certificated stocks continued to grow, rising 13,054 bales to 221,525. There were 13,494 newly certified bales, 440 bales decertified and 42,414 bales awaiting review.
The Cotlook A Index of world prices was unchanged Wednesday morning at 84.10 cents. The premium to TuesdayΆs March futures settlement widened 15 points to 6.54 cents.
