Strong correlation noted between cotton planted area and the ratios of expected cotton prices to corn and soybeans, adjusted for soil moisture on the Texas High Plains at planting time. Planting neared completion in the Texas valley. Upland loans outstanding dropped to 3.687 million RB.
Cotton futures fell to a three-session low and closed near the low Monday amid positioning ahead of the end of the month and the prospective plantings report.
Spot May settled down 53 points to 76.94 cents, trading within an 83-point range from 77.73 to 76.90 cents. July finished down 43 points to 78.31 cents, trading within a 71-point range from 78.93 to 78.22 cents, and December closed down 47 points to 75.02 cents, trading within a 51-point range from 75.49 to 74.98 cents.
A paring of net longs and probes of the short side by some funds and speculators, as shown in weekly traders-commitments data, may have contributed to negative sentiment ahead of the U.S. prospective plantings report. Mill fixations may have prevented deeper losses.
Volume slowed to an estimated 25,428 lots from 28,454 lots the prior session when spreads accounted for 14,778 lots or 52%, EFS 1,389 lots and EFP 598 lots. Options volume slipped to 5,742 lots (2,330 calls and 3,412 puts) from 7,955 lots (4,778 calls and 3,177 puts).
A new survey showed expectations for U.S. 2017 cotton plantings at an average of 11.409 million acres, up 13.2% from 10.074 million acres seeded last year.
Estimates ranged from 10.5 million to 12.3 million acres, compared with USDAΆs analytical forecast of 11.5 million acres — up 14% from 2016 — reported at its Agricultural Outlook Forum last month.
Higher cotton prices and lower grain prices since the preliminary USDA projection have supported expectations in some quarters for plantings to exceed the outlook projection. A survey of analysts and traders reported last week had shown estimates averaging 11.9 million acres.
The USDA will release results of its early March survey of producer intentions on Friday. Analysis of historical responses has shown a strong correlation between cotton planted area and the ratios of expected cotton prices to corn and soybeans, further adjusted for soil moisture conditions on the Texas High Plains at planting time.
The preliminary USDA analysis showed a harvested area of 10 million acres, up 5% from 2016. A projected 13% abandonment was based on regional long-run averages except for the Southwest where a forecast 20 percent was below the historical average but well above 8% in 2016. Southwest abandonment rates are highly variable.
Recent rainfall helped spur germination in the Rio Grande Valley and southern Texas, USDAΆs Agricultural Marketing Service reported in a weekly cotton review on Friday.
Planting neared completion in the valley and rapidly expanded in the Upper Coast. The traditional optimum cotton planting period on the Texas High Plains doesnΆt open until May 5, though a small acreage may be seeded in late April if conditions are favorable.
On the old-crop scene, U.S. upland loans outstanding declined 268,870 running bales to 3.687 million during the week ended last Monday, the latest USDA figures showed.
Repayments were made on 293,164 RB and entries were 24,294 RB. Upland cotton under loan included 322,278 RB of Form A loans issued to individual growers and 3.365 million RB of Form G loans issued to marketing cooperatives or loan servicing agents.
Fewer than 15 gins remained in operation in the West Texas Plains, with most of the activity concentrated in the Rolling Plains. Ginning was completed in Kansas, while three gins continued operating in Oklahoma.
Futures open interest grew 1,522 lots Friday to 282,834, with MayΆs down 2,159 lots to 151,876, JulyΆs up 1,938 lots to 52,075 and DecemberΆs up 1,287 lots to 69,808. Cert stocks were unchanged at 326,221 bales.
