Marginal cut in domestic 2015-16 mill use represented the sole revision in U.S. estimates. Lower world 2016-17 beginning and ending stocks reflected mainly lower production by China.
Cotton futures settled on slight losses in most contracts Friday after USDA reported little change in its U.S. supply-demand estimates and reduced its world 2016-17 beginning and ending stocks forecasts.
Spot July settled down 21 points to 64.75 cents, trading within a 103-point range from down 48 points at 64.48 to up 55 points at 65.51 cents. It traded inside the prior-day range, sometimes considered a sign of indecisiveness.
December closed down 23 points to 65.07 cents, trading within a 107-point range from down 46 points at 64.84 to up 61 points at 65.91 cents. For the week, July gained 83 points and December added 116 points.
Volume was estimated electronically at 43,836 lots, up from 40,406 lots the previous session when spreads totaled 24,691 lots or 61%, block trades 808 lots, EFP 304 lots and EFS 44 lots.
A marginal reduction of 50,000 bales in 2015-16 domestic mill use was the sole revision in USDAΆs monthly U.S. supply-demand estimates, resulting in a corresponding hike in 2016-17 beginning and ending stocks.
Ending stocks now are forecast at 4.1 million bales for 2015-16 and 4.8 million bales for 2016-17, reflecting stocks-to-use ratios of 32.3% for this season and 34% for next season.
Forecasts for marketing year average prices received by producers are unchanged for both seasons. The forecast for 2016-17 at the midpoint of 57 cents is down marginally from 58 cents estimated for 2015-16 and would be the lowest since 2008-09.
Many analysts had expected USDA to wait until after the June 30 planted acreage report to adjust its 2016-17 production estimate of 14.8 million bales, up 15% from the final 12.89 million bales in 2015-16.
Globally, 2016-17 projections featured a reduction of 760,000 bales to 102.08 million in beginning stocks and a 1.75-million-bale cut to 94.73 million in ending stocks, mainly on lower production expected by China.
The crop estimates for China fell 1.3 million bales to 22.5 million for 2015-16 and by a million bales to 21.5 million for 2016-17. Reports from Chinese sources indicated that 2015-crop production in eastern China was lower than previously estimated, USDA said.
Projected 2016-17 production also declined in Egypt and the African Franc Zone, with EgyptΆs crop pegged at its lowest since the mid-1800s.
World cotton consumption declined slightly by 190,000 bales to 110.59 million for 2016-17 and 250,000 bales to 108.78 million for 2015-16. Mill use was reduced in India, partially offset by an increase in Turkey.
Projected 2016-17 global ending stocks of 94.7 million bales are 1.7 million bales below last monthΆs estimate, reflecting a 2-million-bale decrease to 54.7 million in ChinaΆs carryout.
Demand has remained strong in the first month of sales from ChinaΆs state reserves, with more than 97% of the offerings finding buyers, USDAΆs Foreign Agricultural Service said in a world markets and trade report. As of Tuesday, 3.2 million bales (697,000 metric tons) had been sold.
Foreign cotton, primarily U.S. and Australian, initially represented a majority of offerings but the amount has been steadily reduced. No foreign cotton was offered in the first week of June. Sales of foreign cotton have nearly reached 300,000 MT (1.378 million bales), the reported limit for this auction cycle.
If sales were to continue at the recent pace and any new reserve purchases are paired for additional sales rotation, the auctions would take at least three to four years to return stock levels to more typical historical levels, the FAS report indicated.
This is a slightly faster pace of stock reductions than was expected a year ago, mainly owing to larger declines in domestic production.
Futures open interest dipped 172 lots Thursday to 214,079, with JulyΆs down 7,197 lots to 62,693 and DecemberΆs up 6,291 lots to 125,951. Cert stocks grew 2,497 bales to 121,761. Awaiting review were 6,757 bales.
