U.S. crop projected at 16.524 million bales, up 28% from last year, and ending stocks at 4.8 million bales, 31% of market offtake. World crop shortfall narrowed 1.04 million bales.
Cotton futures closed on moderate losses Friday after USDA projected larger-than-expected U.S. production and ending stocks and shaved the expected world crop shortfall by a million bales.
March finished down 62 points to 70.80 cents, in the lower third of its 151-point range from up 39 points at 71.81 cents to down 112 points at a five-session low at 70.30 cents. For the week, March lost a slight 24 points.
The May delivery dropped 58 points to close at 71.11 cents, while December 2017 gave up 53 points to settle at 69.35 cents.
Volume totaled an electronically estimated 21,800 lots, compared with 21,604 lots the previous session when spreads accounted for 6,231 lots or 29% and EFP 83 lots.
U.S. all-cotton production is projected up 362,000 bales or 2% from a month ago to 16.524 million, up 28% from last seasonΆs 12.888 million. A 500,000-bale increase to 7.4 million in Texas was partially offset by decreases in the Carolinas.
Upland production is forecast at 15.962 million bales, up from 15.6 million projected last month and 12.455 million harvested last season. The Pima crop forecast of 562,000 bales, up from 502,000 last year, was carried forward from last month.
All-cotton yields are expected to average 821 pounds per harvested acre, up 55 pounds from last year but a pound below the five-year average.
By regions, upland production compared with a month ago is forecast at 3.891 million bales in the Southeast, down 120,000 bales; 3.33 million bales in the Mid-South, down 40,000; 8.036 million bales in the Southwest, up 511,000; and 705,000 bales in the West, up 20,000.
The USDA raised its export forecast by 200,000 bales from a month ago to 12.2 million but cut its domestic use projection by that same amount to 3.3 million. The ending stocks projection rose by 300,000 bales to 4.8 million. ThatΆs 31% of the expected market offtake, compared with 29% last month 30.2% last season.
The reduction in domestic cotton consumption, which caught many by surprise, was attributed to increasing polyester competition and the pace of mill activity thus far.
Most analysts had looked for slight increases in the U.S. crop and exports and steady to modestly higher ending stocks, though there were outlier estimates — as usual — for higher adjustments both up and down.
The forecast range of 64 to 70 cents per pound for the marketing year average price received by producers was narrowed a cent on each end, leaving the midpoint unchanged on the month at 64 cents.
World estimates showed a 960,000-bale increase in production to 104.24 million and a marginal 80,000-bale decrease in mill use to 111.91 million. This narrowed the production shortfall by 1.04 million bales to 7.67 million.
Production prospects rose in Australia and elsewhere, while the consumption outlook declined in India and South Korea but rose in China and Vietnam. Global trade was revised marginally to 35.3 million bales.
World beginning stocks dipped 110,000 bales to 96.8 million and ending stocks were raised 842,000 bales to 89.15 million. The carryout is estimated at 79.7% of expected mill use, compared with 78.9% foreseen in November and 87% in 2015-16.
Futures open interest gained 388 lots Thursday to 250,975, with MarchΆs up 300 lots to 177,474 and MayΆs down 66 lots to 39,632. Cert stocks grew 2,047 bales to 60,693. There were 2,399 newly certified bales and 352 bales decertified.
