March breached its 200-day moving average. U.S. export sales maintained a healthy pace despite slowing. Commitments rose to 72% of the USDA forecast. Details still awaited on ChinaΆs new cotton policy.
Cotton futures finished with triple-digit gains in nearby contracts Friday as U.S. export sales maintained a healthy pace, spawning thoughts of higher prices to ration the remaining supply, and traders pondered the effects of a looming change ChinaΆs stockpiling policy.
Spot March settled up 123 points to 84.12 cents, its highest close since Oct. 21 and near the middle of its 200-point range from up 31 points at 83.20 cents on the overnight opening to up 231 points at 85.20 cents. It triggered buy stops on the way up after breaching its 200-day moving average overnight.
The May contract closed up 108 points to 83.70 cents, July gained 80 points to 83.42 cents and December settled up 41 points to 77.91 cents. For the week, the market gained 97 points in March, 79 points in May, 53 points in July and 95 points in December.
Volume quickened to an estimated 17,800 lots from only 5,141 lots the previous session when spreads accounted for 1,759 lots or 34% and EFP for 103 lots. Options volume totaled 6,757 calls and 1,301 puts.
The market already had topped highs of the prior eight weeks when USDA issued its U.S. export sales-shipments report. Futures then extended the advance to the session high, basis March, about 40 minutes later.
News that China confirmed that it planned to scrap its cotton stockpiling program in favor of direct subsidies to growers appeared to have driven futures into buy stops, analysts said, even though the change had been widely expected.
Some initially viewed the news as fueling hopes the government soon will issue new import permits to mills, while others thought the change could make more room in the domestic market for the Chinese crop and result in smaller imports.
A time frame for implementation of the new program and other details werenΆt announced. Some analysts have said the new policy likely would take effect with the onset of the 2014-crop marketing year.
Net all-cotton export sales for shipment this season slipped but not as much as expected, dipping to 230,200 running bales for the week ended Dec. 19 from 242,200 bales the prior week.
Upland net sales of 221,600 RB, down from 236,000 bales, reflected gross sales of 224,200 bales and cancellations of 2,500 bales.
Commitments climbed to 7.296 million RB, 1.594 million RB or about 18% behind sales a year ago, but totaled 72% of the USDA export forecast, ahead of 70% of final exports at the corresponding point last season.
All-cotton shipments rose to 168,900 RB from 161,200 bales, boosting exports for the season to 2.791 million RB. This was about 418,000 RB behind year-ago shipments. However, shipments have reached 28% of the USDA estimate, compared with 24% of final exports a year ago.
Leading upland buyers included Turkey, 83,400 bales; China, 43,400; Vietnam, 39,600; Indonesia, 14,100; and India, 7,800.
The primary destinations for upland shipments of 157,100 RB included Turkey, 39,800 bales; China, 30,000; Vietnam, 16,400; Mexico, 12,600; and Pakistan, 9,500.
To achieve the USDA estimate, shipments need to average roughly 235,400 running bales a week, while weekly sales averaging 90,000 RB would match the forecast.
Net upland sales of 20,700 RB for shipment next season brought 2014-15 commitments to 271,200 RB, compared with forward bookings a year ago of 516,400 RB. New-crop buyers included Indonesia, 9,300 RB; South Korea, 5,800; and Mexico, 5,500.
Futures open interest dropped 265 lots Thursday to 169,007, with MarchΆs down 409 lots to 110,953 and MayΆs up 77 lots to 32,505. Cert stocks were unchanged at 35,315 bales.
The Cotlook A Index of world values Friday morning was 88.25 cents, up 75 points from the previous quote on Tuesday and a premium of 5.36 cents over ThursdayΆs March futures settlement. For the week, the index was down 10 points.