December closed on contract high finish. As expected, USDA left its U.S. 2016-17 crop estimates unchanged, raised exports 200,000 bales and cut ending stocks that amount. World estimates showed virtually unchanged production, slightly higher consumption and a smaller carryover.
Cotton futures settled modestly ahead, up 15 to 33 points, with spot March leading the gains and touching the session high just prior to release of USDAΆs monthly supply-demand estimates.
March finished at 75.58 cents, slightly below the middle of a tight 88-point range from 75.25 to 76.13 cents. Last trading day in March options is Friday and first notice day looms Feb. 22.
May settled up 22 points to 76.25 cents, July up 20 points to 77.41 cents and December up 18 points to a new high contract settlement at 74.16 cents, a tick above its prior high settlement on Aug. 8. DecemberΆs high of 74.19 cents was just shy of its contract high of 74.25 cents in August.
Volume was estimated electronically at 65,600 lots, compared with 66,939 lots the previous session when spreads accounted for 54,152 lots or a whopping 81%, EFS 770 lots and EFP 176 lots.
As expected, USDA left its U.S. 2016-17 crop estimates unchanged this month, boosted exports 200,000 bales to 12.7 million and lowered ending stocks a corresponding amount to 4.8 million, 30% of projected offtake.
No changes in production had been expected until after the end-of-season ginning report in March. Domestic mill use was unchanged, which with the increase in exports brought the projected market offtake to 16 million bales, up from 12.6 million last season.
The marketing year average price received by producers for upland cotton is projected to average between 67 and 71 cents per pound, an increase of 2 cents on each end of the range, as recent market prices have exceeded expectations, USDA said. The midpoint of 69 cents is up from an average of 61.20 cents last season.
Global estimates showed slightly higher consumption, up 760,000 bales or 112.52 million, and lower ending stocks, down 750,000 bales to 89.90 million. World stocks are forecast at 79.9% of consumption, compared with 81.1% foreseen last month, 87% last season and 100.3% two years ago.
World production was virtually unchanged from last month at 105.42, up 80,000 bales and now 7.1 million bales shy of projected global mill use. A 500,000-bale increase in ChinaΆs crop to 22.5 million was mostly offset by lower expectations for Pakistan, Uzbekistan and Turkmenistan.
Global consumption rose mainly on increases for India, up 500,000 bales to 23.75 million, and Bangladesh and Vietnam, both of which were up 200,000 bales to 6.7 million bales and 5.1 million bales, respectively.
The projected ending stocks forecast for China rose by 500,000 bales to 48.85 million, 57% of the expected world carryout. China is expected to resume auctions from its cotton stockpile next month.
In a report on world cotton markets and trade, USDAΆs Foreign Agricultural Service noted that the last 12 months have seen a substantial change in expectations about global supply and demand.
As a result of those changes, as well as some back-year revisions, forecasts for ChinaΆs ending stocks fell sharply during the first part of the marketing year but have since stabilized.
And even as projections for ending stocks in the rest of the world were roughly stable for the first part of the year, recent supply-demand reports generally have been above the February 2016 forecast of ending stocks outside China.
That factor is expected to impact supply and demand going into 2017-18. The USDAΆs first 2017-18 forecasts will be released at the Agricultural Outlook forum on Feb. 24.
Futures open interest dipped 706 lots to 282,825, with MarchΆs down 14,591 lots to 104,332 and MayΆs up 11,164 lots to 97,772. Certified stocks grew 4,925 bales to 239,949. Awaiting review were 8,129 bales at Galveston.
