Forward quotes indicate a new-crop AWP would be within around a couple of cents of the base loan rate. Light on-call activity reported in December. U.S. upland cotton under loan fell to 213,969 bales.
Cotton futures fell to a new contract low and low close in benchmark December for the second straight session Friday, extending a weekly losing streak to seven in a row.
December closed off 70 points to 65.35 cents, below the midpoint of its 192-point range from up 40 points at 66.45 to down 152 points at 64.53 cents. It lost 239 points for the week.
Spot October shed 124 points to close at 65.16 cents, settling at a discount to December for the first time since July 8, and March finished down 95 points to 66.03 cents.
Volume slowed to an estimated 21,600 lots from 28,373 lots the previous session when spreads accounted for 5,439 lots or 19% and EFP 291 lots. Options volume totaled 6,515 calls and 5,521 puts.
With prices already having fallen to or below the cost of production, unofficial calculations indicate a new-crop adjusted world price (AWP) would be within around a couple of cents of the base U.S. loan rate.
The average of the five lowest-priced world growths quoted for forward shipment for the Far East dipped 20 points to 74.18 cents during the week ended Thursday, according to USDA.
Applying the transportation and quality differential of 19.84 cents for 2013-14 cotton to that 2014-15 average would translate into an estimated new-crop AWP of 54.34 cents, against the base government loan rate of 52 cents.
Officially, USDA announced the AWP for the program week ahead at 61.78 cents, down from 62.06 cents this week. The low-quote world growth average dipped 28 points to 81.62 cents and the lowest U.S. quote landed in the Far East slipped 20 points to 86.10 cents.
Meanwhile, mills priced a light 91 on-call lots in December last week to shave their unpriced position there to 13,869 lots, according to the latest call data from the Commodity Futures Trading Commission.
Producers priced a modest 259 December lots to trim their unfixed position to 22,427 lots. The net call difference declined 168 lots to 8,558, which was 7.13% of DecemberΆs rising open interest.
Mills added a total of 2,240 lots in March, May and July, boosting their open holdings in those three contracts to 28,885 lots, while producers were inactive in those 2014-15 deliveries beyond December.
In the 2014-15 contracts as a group, unpriced holdings rose by 2,149 lots on the mill side to 42,754 and declined 259 lots on the producer side to 24,555. This widened the net call difference by 2,408 lots to 18,199, 12.2% of the growing open interest.
In other happenings, repayments on 33,935 bales during the week ended July 21 reduced U.S. outstanding loans on upland cotton to 213,969 bales, according to the latest USDA figures.
Upland cotton under loan included 28,677 bales of Form A issued to individual growers and 185,292 bales of Form G issued to marketing cooperatives or loan servicing agents.
Futures open interest expanded 3,049 lots Thursday to 157,018, with DecemberΆs up 1,289 lots to 121,909 and MarchΆs up 1,255 lots to 27,241. Certificated stocks declined 6,358 bales to 176,373.
World values as measured by the Cotlook A Index fell 200 points Friday morning to 81.15 cents. The premium to ThursdayΆs October futures close widened 37 points to 14.75 cents.
Forward A Index values for 2014-15 dropped 135 points to 74.45 cents, narrowing the discount to the 2013-14 index by 65 points to 6.70 cents and widening the premium to ThursdayΆs December settlement by 68 points to 8.40 cents.
