A negative tone in outside markets and improving U.S. crop conditions contributed to selling. Crop estimate for Egypt slashed to all-time low.
Cotton futures again settled mostly lower Wednesday, with spot July extending its losing string to six sessions in a row and finishing at its lowest close since May 25.
July settled down 44 points to 62.60 cents, just off the low of its 97-point range from up 45 points at 63.49 to down 52 points at 62.52 cents. It closed below its prior June intraday low of 62.81 cents.
December slipped 29 points to close at 63.62 cents, also just off the low of its 68-point range from up 31 points at 64.22 — even with TuesdayΆs high — to down 37 points at 63.54 cents. It closed 102 points above its June low but finished below its 18-day MA.
Thinly traded October was the only winner, settling up 19 points to 64.33 cents.
The Federal Reserve held its benchmark lending rate steady on Wednesday and officials lowered projections of how much they expect to raise short-term interest rates in coming years, signs that persistently slow economic growth and low inflation are forcing the central bank to rethink how fast it can move rates higher, Dow Jones Newswires reported.
The news, announced shortly before the cotton close, left little time for the cotton market to react. U.S. dollar index futures initially fell on the news and traded down 0.560 to 94.480 near the cotton finish.
Volume slowed to an estimated 35,484 lots from 47,471 lots the previous session when spreads totaled 23,143 lots or 49%, block volume 2,000 lots, EFS 315 lots and EFP 197 lots. Options volume totaled 3,306 calls and 823 puts.
In international news, cotton planting in India, the worldΆs biggest producer, is likely to fall to the lowest in seven years in the 2016-17 marketing year as farmers switch to other crops, potentially cutting production and exports of the fiber crop, Reuters reported.
The Cotton Association of India is expecting a reduction in cotton area of around 7%, Dhiren Sheth, president of the CAI, told Reuters. This would cut the planted area to around 11 million hectares or 27.2 million acres, lowest since 2009-10 and down from 11.9 million hectares or 29.4 million acres in 2015-16, the report indicated.
The reduction is similar to one reported last week prior to USDAΆs June supply-demand estimates. The World Agricultural Outlook Board left its June estimate of IndiaΆs 2016-17 production unchanged at 28 million bales, up 1.2 million bales from 2015-16 and 27% of the global crop.
With a slightly lower area, the USDA production estimate reflected a yield rebound from the relatively low level of 2015-16.
Production in China, the worldΆs second largest cotton producer, is forecast to decline a million bales from 2015-16 to 21.5 million, the lowest since 2000-01.
The area devoted to cotton in China continues to trend lower and is projected at the lowest in more than 65 years. With government policies reducing support for cotton farmers, particularly in eastern China, most of the crop now is grown in Xinjiang, a high-yielding northwestern region.
Meanwhile, U.S. 2015-16 upland export sales for the week ended June 9, set for release at 7:30 a.m. CDT on Thursday, are generally expected to come in below the prior weekΆs 110,100 RB. All-cotton shipments are expected to remain above the weekly pace need to reach the USDA estimate.
Futures open interest fell 4,560 lots Tuesday to 200,824, with JulyΆs down 8,503 lots to 33,773 and DecemberΆs up 3,062 lots to 139,212. Cert stocks grew 1,648 bales to 124,335. Awaiting review were 2,661 bales.
