December reversed off new seasonal high. U.S. crop forecast for 2014-15 expected to be reduced from earlier estimate but to top 2013-14 output. Higher ending stocks foreseen for next season.
Cotton futures finished mixed Thursday as traders tweaked positions ahead of USDAΆs 2013-14 and 2014-15 supply-demand estimates.
Spot July finished with the only gain, settling up 50 points to 93.05 cents, in the upper half of its 200-point range from down 28 points at 92.27 — even with the prior-session low — to up 172 points at 94.27 cents.
December completed an outside-range reversal to the downside, posting a new high for the move and then closing off 40 points to 83.51 cents, below the prior-session low. It settled just off the low of its 134-point range from up 83 points at 84.74 to down 51 points at 83.40 cents.
The market notched session highs after U.S. all-cotton export sales came in at above expectations at a combined 219,400 running bales during the week ended May 1 for shipment this season and next. Combined crop year sales the prior week were 86,500 RB.
Volume declined to an estimated 17,200 lots from 18,505 lots the previous session when spreads totaled 6,128 lots or 33% and EFP 22 lots. Options volume totaled 2,411 calls and 1,769 puts.
Intensified drought in the Texas High Plains is widely expected to contribute to a reduction in the U.S. crop forecast from an earlier forecast in USDAΆs 2014-15 supply-demand report set for release at 11 a.m. CDT on Friday.
A survey of cotton analysts by The Wall Street Journal showed an average crop projection of 15.3 million bales, a million bales below the USDA estimate at its outlook conference in February.
Estimates ranged from 13.8 million to 16 million bales, up from the 2013-14 output of 12.87 million bales.
Ending stocks were pegged at an average of 3.8 million bales within a range from 3 million to 4.8 million bales, against 4.6 million bales foreseen in February and 2.5 million bales estimated for 2013-14.
The analysts estimated exports at an average of 10.5 million bales within a range from 10 million to 11 million, compared with 11 million projected in February and the estimate for this season of 10.7 million.
The survey didnΆt compile an estimate on domestic mill use. U.S. mill consumption was projected at 3.7 million bales at the outlook conference, up from 3.6 million now forecast for 2013-14 and 3.5 million in 2012-13.
With world production expected to exceed consumption for the fifth year in a row in 2014-15, global ending stocks, as reported earlier this week, are foreseen rising to a new all-time high.
However, the world stocks wonΆt represent available supplies because of ongoing uncertainties surrounding the retention or disposal and the quality of the huge carry-in stocks controlled by China.
Futures open interest edged up 486 lots Wednesday to 195,914, with MayΆs down 38 lots to 357, JulyΆs down 1,156 lots to 122,004 and DecemberΆs up 1,563 lots to 66,263.
Certificated stocks grew 11,648 bales to 365,390. There were 12,508 newly certified bales, 860 bales decertified and 3,841 bales awaiting review.
World values as measured by the Cotlook A Index fell 140 points Thursday morning to 93.80 cents. The premium to WednesdayΆs July futures settlement widened three points to 1.25 cents.
The Forward A Index for 2014-15 eased off five points to 81.25 cents, narrowing its discount to the 2013-14 index by 135 points to 2.55 cents and widening the premium to WednesdayΆs December futures by 16 points to 7.34 cents.
