Torrential rains and flooding in parts of the Southeast, heavily concentrated in hard-hit South Carolina, swept cotton futures into buy stops last week as traders awaited USDAΆs monthly supply-demand estimates.
Spot December gained 112 points for the week ended Thursday to close at 61.72 cents. Its nine-day moving average crossed above the 18-day average, considered a positive near-term technical indicator.
The rally high of 62.48 cents on Wednesday precisely hit a 61.8 percent retracement of the 450-point decline from the Sept. 11 high of 64.20 to the Sept. 24 contract low of 59.70 and also coincided with chart resistance at the Sept. 18 high.
Cash grower-to-business sales increased to 6,357 bales on The Seam from 3,255 bales. Prices rose to an average of 54.41 cents from 50.41 cents, reflecting gains to 10.94 cents from 9.63 cents. Daily average prices ranged from 51.73 to 55.42 cents.
The market rallied on Thursday to near the weekΆs high from a three-session low on larger-than-expected U.S. weekly export sales but pulled back as traders tweaked positions prior to USDA supply-demand estimates.
The report, scheduled for release on Friday, was expected to show a slight increase in the U.S. crop forecast, based on conditions as of Oct. 1. It was expected that USDA hadnΆt had time to fully quantify the impact of the rains and flooding.
Net all-cotton export sales for shipment this season rose to 209,900 running bales during the week ended Oct. 1 from the prior weekΆs 121,900 bales, boosting 2015-16 commitments to 3.41 million.
Upland sales of 206,900 bales were the largest since the week ended March 12, not counting unshipped old-crop export sales rolled forward at the start of this marketing year.
All-cotton commitments narrowed the lag behind year-ago sales by 141,000 bales to 2.205 million and were 34 percent of the USDA export forecast. A year ago, commitments were 51 percent of final exports.
Sales for delivery next season jumped to 358,300 running bales from 800 bales the previous week. This hiked combined sales for both marketing years to 568,200 bales. New-crop commitments of 569,200 bales climbed to 106,400 bales ahead of forward bookings a year ago.
All-cotton shipments of 130,800 bales, up from 76,700 the week before, lifted the total for the season to 1.031 million. Cumulative shipments were 167,000 running bales ahead of exports a year ago.
Shipments have reached about 10 percent of the USDA estimate, compared with about 8 percent of final 2014-15 exports at the corresponding point last season.
To achieve the USDA estimate, shipments need to average roughly 201,400 running bales a week, while weekly sales averaging approximately 147,400 bales would match the export projection.
Separately, mills priced 1,119 on-call lots in December and producers priced 437 lots during the week ended Oct. 2, according to the Commodity Futures Trading Commission. This reduced unpriced holdings to 13,875 lots for the mills and 11,165 lots for the producers.
The net call difference declined by 682 lots to 2,710 (271,000 bales), which represented 2.21 percent of the rising open interest. The unpriced mill position outweighed that of producers by a ratio of 1.24:1.
On the U.S. crop scene, cotton ratings declined as boll opening reached 77 percent and harvesting advanced to 16 percent during the week ended Oct. 4, USDA reported.
Cotton rated good to excellent dropped two percentage points to 48 percent and poor to very poor rose two points to 15 percent. A year ago, good-excellent was 47 percent and poor-very poor 20 percent. The DTN cotton condition index slipped to 124 from 131 the prior week but was up from 111 a year ago.
Boll opening remained only a point behind the five-year average and the slight harvest lag widened a point to two points behind average. Compared with a year ago, boll opening was up five points and harvest progress was up two points.
U.S. upland growers had contracted about 3 percent of their expected upland crop as of Oct. 1, down from 9 percent a year ago and at least a 10-year low, according to informal surveys by the Agricultural Marketing Service.
Growers booked about 6 percent of their upland acres in the Southeast and Mid-South, down from 22 percent and 9 percent, respectively, a year earlier. Contracting totaled only 1 percent in the Southwest, down from 5 percent, and rose to 6 percent in the West from 2 percent.
Those estimates donΆt include cotton consigned to marketing organizations but do include cotton contracted with them. The 10-year contracting high by Oct. 1 was 37 percent in 2011.
On the global cotton scene, the International Cotton Advisory Committee raised its world ending stocks estimate by 1 percent from a month ago to 20.62 million metric tons or 94.71 million 480-pound bales.
Converted to statistical bales, the ICAC estimated world production at 109.5 million, up 1 percent on the month but down 9 percent from last season. The 2015-16 cotton area was projected down 7 percent to 31.1 million hectares or 76.85 million acres owing to significantly lower cotton prices in 2014-15.
The secretariat lowered the world cotton consumption forecast fractionally to 114.84 million bales, up 2 percent from 2014-15, with mill use growth seen remaining flat or slowing in many countries. World cotton trade was projected stable around 35 million bales.
Meanwhile, in cotton futures-options combined, trend-following funds trimmed their net long position by just 78 lots to 11,200 during the week ended Sept. 29, government data showed.
Index funds nudged their net longs up 18 lots to 66,446, while traders with nonreportable positions boosted their net short position by 667 lots to 4,327. Commercials shaved their net shorts by 728 lots to 73,318, adding 2,461 longs along with 1,733 shorts.
DUANE HOWELL is retired farm editor of the Avalanche-Journal. His email address is duane.howell@sbcglobal.net.
