Cotton futures backed off after posting three-session highs Friday and settled little changed to slightly lower in brisk dealings.
Spot July closed off a single tick at 84.86 cents, in the lower half of its 168-point range from down 56 points at 84.31 to up 112 points at 85.99 cents.
December settled off 21 points to 85.18 cents, trading within an 84-point range from down 54 points at 84.85 to up 30 points at 85.69 cents. For the week, July gained 550 points and December 312 points.
Volume quickened to an estimated 45,200 lots from 324,790 lots the prior session when spreads totaled 17,534 or 50% and EFP 920 lots. Options volume totaled 2,872 calls and 4,539 puts.
Reports circulating from a cotton conference in China indicated that the worldΆs largest cotton importing country is considering changes to its cotton stockpile policy, analysts said.
Beijing previously has indicated the government would continue its basic cotton policy through the 2013-14 marketing year and would continue to buy domestic cotton at prices well above world values.
Yet uncertainty about the duration of ChinaΆs ongoing stock-accumulation policy has persisted and has affected cotton price expectations and planting decisions abroad, many analysts agree.
ChinaΆs ending stocks, which nearly tripled in 2011-12 and are estimated to rise 55% in 2012-13, are projected to increase an additional 20% in 2013-14 as the national reserve grows to about 50 million bales, according to USDA analysts.
If USDA projections are realized, China will account for 63% of 2013-14 global ending stocks, up six percentage points from the prior year. With Beijing stockpiling a growing share of world stocks, the carryover outside China is projected to fall nearly 2 million bales next season.
The reduction in stocks available for consumption and trade outside China is supportive of world prices, analysts say, and therefore a factor boosting cotton production constraining consumption.
Meanwhile, unfixed on-call positions based in July fell 2,659 lots to 11,063 on the mill side last week and increased 263 lots to 3,094 on the producer side, according to Commodity Futures Trading Commission data.
The net call difference thus fell 2,922 lots to 7,969, which was 8.26% of JulyΆs declining open interest, against 9.7% a week earlier. The unfixed mill position outweighed that of producers by a ratio of 3.57:1, down from 4.84% the previous week.
Light call activity in December saw mills adding 119 lots to hike their unfixed position to 23,741, while producers pared their holdings by 271 lots to 11,403. This resulted in the net call difference rising 390 lots to 11,403 or 14.91% of the open interest, down from 16.38%.
Mills had 1.92 more December contracts on which to fix prices than did producers, compared with a ratio of 1.87:1 a week earlier. Mills also added 597 lots to their unfixed holdings in March to raise those to 11,632 lots, against an unchanged 97 lots held by producers.
Elsewhere, producers boosted their unfixed December 2014 position by 135 lots to 4,242 and mills added 60 lots to nudge theirs to 1,459.
Futures open interest edged up 181 lots Thursday to 179,399, with JulyΆs down 3,959 lots to 85,483 and DecemberΆs up 3,596 lots to 85,106, nearly taking the lead.
Certificated stocks grew 4,298 bales to 527,774. There were 4,317 newly certified bales, 19 bales decertified and 9,809 bales awaiting review. Cert stocks on the week expanded 13,866 bales.
World values as measured by the Cotlook A Index gained 50 points Friday morning to 93.20 cents. The index premium to ThursdayΆs July futures settlement narrowed 85 points to 8.33 cents. For the week, the index gained 380 points.
