U.S. agricultural attache left the postΆs crop estimate for India steady but raised its ending stocks forecast. Traders await USDA reports.
Cotton futures settled modestly lower Wednesday, down 17 to 45 points, as traders looked ahead to a couple of USDA reports.
March closed down 28 points to 71.05 cents, just above the midpoint of its 105-point range from up 17 points at 71.50 to down 88 points at a three-session low at 70.45 cents. It has settled the last five sessions within a mere 43-point range, from 70.90 to 71.33 cents.
December expired off 28 points at 72.11 cents, a 106-point premium over March, while December 2017 finished down 21 points to 69.75 cents.
Volume rose to an estimated 16,690 lots from 12,213 lots the previous session when spreads accounted for 3,345 lots or 27%, EFS 20 lots and EFP nine lots. Options volume totaled 3,034 calls and 1,448 puts.
On the international scene, IndiaΆs cotton production prospects remain good, though arrivals have been delayed, according to a report from the U.S. agricultural attache in New Delhi.
The Foreign Agricultural Service post left its estimate of IndiaΆs crop at 27 million bales, same as USDAΆs official forecast last month. However, the postΆs estimates of beginning and ending stocks at 11.73 million and 12.83 million bales, respectively, are higher by 790,000 bales and 1.29 million bales.
Trade sources indicated the governmentΆs “demonetization” effort announced on Nov. 8 led to the disruption and delay in cotton arrivals as farmers were unable to pay contract laborers to harvest the standing crop.
“In cases where farmers harvest a crop, they are reluctant to bring it to the market yard as they cannot receive adequate cash for the crop, though they can, if they have a bank account, receive payment by check or online bank transfer,” the report said.
“Still, however, withdrawal limits exist and farmers donΆt have immediate access to the deposited check or online payment.”
Trade sources indicated daily cotton arrivals slowed by 25% from last year and attributed the slowdown to cash availability. Mill purchases were limited to covering immediate requirements.
The post estimated total domestic consumption at 23.5 million bales and exports at 4.2 million bales, down 500,000 bales and the same, respectively, compared with USDAΆs official November forecasts.
Imports were pegged at 1.8 million bales, same as USDAΆs forecast. The post said imports have slowed since the new domestic crop started showing up from late-October onward. The United States, Australia and Egypt were the largest supplying countries in November.
Meanwhile, trading volumes have remained low ahead of the USDA U.S. weekly export sales-shipments report on Thursday and monthly supply-demand estimates on Friday.
Upland sales for this season topped expectations at 202,300 running bales for the reporting week ended Nov. 24 and have averaged 210,100 RB the last four weeks, well above the average needed to match USDAΆs export forecast. But upland shipments have lagged well behind at a four-week average of 124,100 RB.
Futures open interest gained 428 lots Tuesday to 251,402, with MarchΆs up 10 lots to 177,906 and MayΆs up 448 lots to 39,567. Cert stocks grew 624 bales to 62,074. There were 4,823 newly certified bales and 4,199 bales decertified. Awaiting review were 1,317 bales at Memphis.
