By Duane Howell
For A-J Media

Worries that an eventual tightening in U.S. monetary policy and slower growth amid weak factory activity in China could sock the global economy contributed to new contract lows in cotton futures last week.

Benchmark December fell to four new contract lows in a row and finished with a 209-point loss to 60.31 cents for the week ended Thursday, up from its lifetime low set earlier in the day at 59.70 cents. It fell below 60 cents three straight times but held on a closing basis above chart support at 59.83, below which support rested at 58.88 and 57.05.

No deliveries were posted on the first notice day for thin October.

Cash grower sales slowed to 1,379 bales on The Seam from 5,555 bales. Prices fell to an average of 52.47 cents from 59.03 cents, with premiums over loan repayment rates falling to 7.84 cents from 11.02 cents.

U.S. export sales for shipment this season for the week ended Sept. 17 came in precisely even with those of the prior week at 100,600 running bales. Sales were considered “decent” in view of low pipeline stocks.

Exports into the world market are expected to account for 73 percent of the total 2015-16 offtake of U.S. cotton.

Commitments reached 3.078 million bales, 2.239 million behind year-ago sales. Bookings were 31 percent of the USDA estimate, compared with 49 percent of final shipments at the corresponding point last season.

Shipments rose to 114,500 bales from 66,400, bringing the total for the season to 824,500, up 125,000 bales from a year ago. To achieve the USDA forecast, shipments need to average roughly 197,200 bales a week.

On the policy front, a report on the 2014 farm bill by The International Centre for Trade and Sustainable Developments contains “numerous invalid assumptions,” says the National Cotton Council.

The ICTSD paper, released at a Geneva conference, has a focus on crop insurance, including the Stacked Income Protection Plan (STAX), and says cotton policies in the 2014 act impact the world market.

Gary Adams, NCC president-CEO, asserted in a report the paper “does not capture the realities of todayΆs cotton market or global cotton policies,” adding that U.S. growers “respond to market signals, not government programs, when making planting decisions.”

The report exaggerates crop insurance usage and inflates crop insurance benefits, Adams said. For example, for the 2015 crop year, about 25 percent of the cotton acreage is covered with a STAX policy, far below the ICTSDΆs 100 percent assumption.

The paper calculates expected net indemnities of $734 million for STAX (with a 70-cent futures price), which is 2.4 times larger than the Congressional Budget OfficeΆs estimate of $300 million.

In another contrast, a Congressional Research Service analysis said that “total indemnity payments under both STAX and any other cotton-specific crop insurance are prohibited from exceeding the value of the insured crop, thus further minimizing any potential production incentive.”

An evaluation by the United Nations Conference on Trade and Development concluded “the incentives to produce cotton in the United States will be weaker than they were during previous decades.”

U.S. 2015 cotton plantings are estimated by USDA at 8.56 million acres, smallest since the payment-in-kind program of 1983.

On the crop scene, recent rains interrupted harvest-aid treatments on the Texas High Plains where cotton has virtually caught up on heat units.

“WeΆve really been blessed with heat units,” commented Mark Brown, Lubbock County agricultural extension agent, pointing out that a lot of cotton is about 60 percent open.

The rains arenΆt expected to have much effect on the cotton crop, coming too late to materially enhance yields and, standing alone, not particularly affecting quality, especially if followed by open weather and bright sunshine. Regrowth in general wasnΆt expected to be a problem.

Extension specialists have encouraged producers to use harvest-aids appropriately and get cotton off the stalk in a timely manner to preserve quality prior to an expected onset of El Nino-associated wet weather.

Cotton is at its highest inherent quality when the bolls pop open, Brown pointed out, and can only deteriorate from that point forward.

ThereΆs a lot of variability in the crop, he said, but added that dryland cotton is a bright spot compared with recent widespread failures. Lubbock CountyΆs cotton area is about evenly split between dryland and irrigated acres.

Lubbock County growers planted cotton on 256,250 acres, down 8.3 percent from last year. The county led the nation in cotton production last year on an output of 279,700 bales.

Trade estimates on the High Plains crop now range largely above USDAΆs latest forecast of 3.95 million bales, up from 3.261 million last year. With favorable weather, industry sources say, enough cotton could be harvested and ginned to initiate reports on quality by perhaps Oct. 10.

Beltwide, weekly crop ratings edged marginally higher as boll opening drew even with last year.

Cotton rated good to excellent held steady at 52 percent, fair gained a percentage point to 36 percent and poor to very poor lost a point to 12 percent, USDA reported.

A year ago, good-excellent was 48 percent, fair 34 percent and poor-very poor 18 percent. The DTN cotton condition index edged up two points to 135, up from 118 last year.

Boll opening at 57 percent lagged four points behind the five-year average, while harvesting at 7 percent was two points behind average.

Meanwhile, trend-following funds trimmed their net longs by 604 lots to 27,144 in futures-options combined during the week ended Sept. 15, according to supplemental Commodity Futures Trading Commission data.

The CFTC revised some supplemental data for the prior week. Index funds cut their net longs by 1,195 lots to 66,703 in the latest reporting week, while small traders flipped to net short 353 lots from net long 1,342 lots. Commercials shaved their net shorts by 3,494 lots to 93,695, covering 2,568 shorts and adding 926 longs.