Increase generally expected in U.S. crop estimate, which wonΆt include losses in the Southeast to Hurricane Matthew. U.S. upland classing reached 1.28 million RB.
Cotton futures settled slightly lower and near the dayΆs low in slow dealings Tuesday, giving back most of the previous sessionΆs modest gain.
Spot December closed down 22 points to 67.14 cents, trading within a 102-point band from up 68 points at 68.04 to down 34 points at 67.02 cents. It hit the high in the wee hours overnight, fell to the low in the morning, bounced to 67.78 cents and drifted downward into the close.
March settled down 28 points to 67.72 cents, while December 2017 dropped 38 points to finish at 68.17 cents.
Ongoing strength in the U.S. dollar index may have contributed to keeping cotton rally efforts in check. Near the cotton close, December dollar index futures traded up 0.705 to 97.640.
Volume slowed to an estimated 18,874 lots from 20,343 lots the previous session when spreads accounted for 7,456 lots or 37%, EFS 116 lots and EFP 106 lots. Options volume totaled 523 calls and 882 puts.
An increase appears generally expected in the U.S. crop estimate in the USDA supply-demand report on Wednesday, based largely on higher production in the Southwest and possibly higher yields in the Delta.
The report, based on conditions around Oct. 1, wonΆt reflect losses in production and quality in the Southeast from Hurricane Matthew.
U.S. all-cotton production was forecast last month at 16.14 million bales, nearly 3.3 million bales higher than last seasonΆs output. The increase resulted from a larger acreage and higher yield.
Upland production was projected at 15.58 million bales, up 25% from the 2015 crop and 1.2 million bales from the five-year average. The Southeast crop was forecast at 4.3 million bales, up 500,000 bales from last season.
With the 2016 acreage similar to a year ago, the Southeast production increase was largely attributable to higher yield expectations, projected at 956 pounds per acre, second highest on record. Cotton area rebounded in the Delta, where the projected yield of 1,090 pounds per acre also would the regionΆs second highest.
The Southwest crop was forecast at 7.225 million bales, up from 6.129 million in 2015 and 46% of the upland output. This would be the regionΆs largest crop in six seasons. Abandonment was estimated at 7%, compared with the five-year average of 36%. Yields were pegged at 618 pounds, down from 623 pounds last season and the five-year average of 626 pounds.
During the last 20 years, the September U.S. upland forecast was below the final tally 11 times and above it nine times. Past differences between the September forecast and the final upland production indicate that chances are two out of three that the 2016 crop will range between 14.6 million and 16.5 million bales, according to USDA.
Meanwhile, U.S. upland cotton classing increased to 298,455 running bales during the week ended last week from the 204,097 the prior week, the latest USDA weekly figures showed.
This boosted the seasonΆs total to 1,280,368 RB, up from 811,743 RB a year ago. Tenderable cotton accounted for 63.6% for the week and 71.1% for the season, compared with 60.8% and 73.4%, respectively, the prior week. A year ago, 61% for the season met tenderable requirements.
About 8% of the projected U.S. upland crop had been classed, compared with about 5% of final production at the corresponding point last season.
Futures open interest declined 3,025 lots Monday to 243,791, with DecemberΆs down 3,175 lots to 151,246 and MarchΆs up 900 lots to 59,309. Cert stocks grew 180 bales to 31,443.
