Positioning took place ahead of twin USDA reports on Thursday. An increase in the U.S. 2016-17 export estimate could translate into a decrease in ending stocks. No updated crop estimate is expected.
Cotton futures finished slightly ahead in the front three deliveries Wednesday amid positioning ahead of USDAΆs monthly supply-demand estimates and its weekly report on U.S. export sales-shipments.
March completed an inside day up 16 points to 75.25 cents, trading within a tight 65-point range from down two points at 75.07 to up 63 points at 75.72 cents. It has posted lower highs four sessions in a row since hitting its highest intraday price last Thursday since Aug. 5.
May gained 29 points to close at 76.43 cents, July rose 26 points to 77.21 cents and December eased two points to 73.98 cents.
Volume dipped to a still-heavy 66,939 lots from a near-record 84,127 lots the prior session when spreads accounted for a whopping 66,806 lots or 79%, EFS 1,041 lots and EFP 185 lots. Options volume slipped to 8,721 lots — 5,368 calls and 3,353 puts — from 10,287 lots.
The USDA on Thursday will issue its export sales-shipments report for the week ended Feb. 2 at 7:30 a.m. CST and its updated 2016-17 supply-demand forecasts at 11 a.m. CST.
Sales are expected to come in below the strong 328,700 running bales of upland sold the prior week, but predominant expectations are for another increase in the export forecast later in the day.
China and some other Asian markets were on Lunar New Year holidays during the latest export sales reporting week. Prices that week hit new highs for the move and closed with a 272-point gain for the week, basis spot March.
As of Jan. 26, all-cotton export commitments were up 67% from a year ago. Net upland sales the last four weeks have averaged 342,000 RB. Upland shipments hit a marketing year high at 354,483 RB the prior reporting week and have a four-week average of 253,800 RB.
With no change considered likely in the U.S. crop estimate ahead of the end-of-season ginning report in March, an increase in this monthΆs export forecast could translate into a decrease in ending stocks.
The USDA raised its export estimate 300,000 bales last month to 12.5 million statistical bales, up from 9.15 million last season and the largest since 2012-13.
A survey of cotton analysts by The Wall Street Journal showed average estimates of 12.74 million bales for exports within a range from 12.6 million to 12.8 million bales. Ending stocks were estimated at an average of 4.81 million bales within a range from 4.7 million to 5 million.
The survey didnΆt include domestic mill consumption, estimated by USDA last month at 3.3 million bales, down from 3.45 million in 2015-16. The USDAΆs ending stocks estimate of 5 million bales is up from 3.8 million last season and the largest in eight years.
Projected all-cotton production rose to nearly 17 million, up from 12.89 million last season and the largest since 2012-13.
No big changes appear generally expected in the world balance sheet. While USDAΆs January world ending stocks estimate was projected down 6.24 million bales from last season to 90.65 million, global stocks outside China were forecast up 3.61 million bales to 42.3 million.
Futures open interest declined 4,550 lots Tuesday to 283,531, with MarchΆs down 18,866 lots to 118,923 and MayΆs up 11,841 lots to 86,608. Open interest had mushroomed eight consecutive sessions to 288,081 lots, not far from the all-time high of 302,683 lots on March 3, 2008.
Certificated stocks grew an additional 10,287 bales to 235,024. Awaiting review were 5,079 bales at Galveston.
