U.S. apparel retailers selling less cotton in imported products. Weekly export sales report back on schedule for Thursday.
Cotton futures tumbled to sharp losses and closed near the lows Wednesday, with spot March off the most at a three-session low finish.
March lost 153 points to close at 83.14 cents, trading from unchanged at 84.67 to down 165 points at 83.02 cents. This was its biggest one-day loss since Oct. 24.
Negative implications associated with the failure again to hold above 85 cents on Tuesday on the fifth probe there in seven sessions may have contributed to snapping two straight days of higher closes.
The May contract shed 141 points to 83.22 cents, July dropped 120 points to 83.08 cents and December fell 140 points to 77.48 cents.
Traders have been adjusting positions ahead of the updated USDA supply-demand report on Friday. Most analysts appear to expect a slight hike in the U.S. production estimate and an offsetting increase in the export projection.
Estimated volume based on electronic figures reached around an estimated 25,000 lots, against a cleared 15,428 lots the previous session when spreads amounted to 6,767 lots or 44% and EFS 35 lots.
U.S. apparel retailers have been selling less cotton in their imported products since the recession, Dow Jones Newswires said, citing a report by Cotton Inc. at the Beltwide Cotton Conference in New Orleans.
From 2007 through 2013, imported womenΆs and girlΆs bottoms, such as jeans and khakis, are up 10% at about 1.4 billion units, but the overall cotton content of those products is down 7%. The average weight of the bottoms also is down 9% to 0.63 pound.
Jon Devine, a senior economist at Cotton Inc., estimated that cottonΆs overall market share has fallen 8% to 9% since 2007.
Meanwhile, estimates on U.S. weekly export sales to be reported by USDA at the regular time of 7:30 a.m. CST Thursday range mostly from around 85,000 to 125,000 running bales of upland for delivery this season, compared with 85,900 bales the previous week.
The report will be for the week ended Jan. 2 when March futures traded from 83.20 to 85.29 cents and ranged on a closing basis from 84.66 to 84.04 cents. Settlements averaged 84.37 cents for the holiday-marked four-day trading week.
Exports are expected to account for 74% of the overall market offtake of 14 million bales projected for U.S. cotton this season. In 1997-98, domestic mills accounted for 60% of an offtake of 18.85 million bales.
Futures open interest expanded 1,157 lots Tuesday to 175,572, with MarchΆs up 104 lots to 111,230 and MayΆs up 589 lots to 35,179.
Certificated stocks increased for a second day, rising 1,059 bales to 37,162 on new certification of 1,587 bales and decertification of 528 bales. No cotton awaited review.
World values as measured by the Cotlook A Index gained 100 points Wednesday morning to 89.80 cents. The index premium to TuesdayΆs March futures settlement narrowed four points to 5.13 cents.
