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Weekly Cotton Comments                 08/10 06:06

   Cotton Loses Ground for Marketing Week

   Market awaited key USDA report. U.S. export bookings opened 2018-19 on a 
record high 8.472 million RB. Exports for 2017-18 reported below estimate. 
Mills raised their unpriced on-call sales fifth consecutive week. U.S. crop 
estimate pegged at 18.39 million bales. Heavy Southwest abandonment eyed. 
Slight cut expected in record world mill use forecast.

By Duane Howell
DTN Cotton Correspondent

   Back in the office while recovering from a hip replacement after breaking a 
hip early last month, I see cotton futures lost ground for the marketing week 
as traders awaited the season's first survey-based U.S. crop estimate. 

   December shed 157 points for the week ended Thursday to close at 87.26 
cents, eking up eight ticks from the prior day's lowest close since July 24. 
Prospects for rain on the drought-gripped Texas Plains and concerns about the 
ongoing U.S.-China tariff war weighed on sentiment. 

   March dropped 106 points to settle at 87.69 cents as December lost its 
narrow premium. Technically, December closed below its nine-day moving average 
on Monday, its 18-day MA on Tuesday and its 50-day MA on Wednesday, remaining 
below all those on Thursday's finish. 

   December traded within a 241-point range, from 86.76 on Aug. 5 to 89.17 
cents on Tuesday, and ended in the lower quarter of the range. It made an 
outside-range reversal down from 89.98 cents on Aug. 1 after several attempts 
failed to cross the 90-cent barrier. "Red" December or December 2019 dipped 68 
points to close at 80.79 cents.

    Fundamentals look constructive. U.S. all-cotton export commitments for the 
2018-19 marketing year, which began Aug. 1, totaled a record opening high 8.472 
million RB as of Aug. 2, up 2.338 million RB or 38% from cumulative sales last 
year, USDA's weekly report showed. 

   Commitments are 58% of USDA's July projection, compared with forward sales a 
year ago of 6.134 million RB or 39% of the current 2017-18 export estimate. And 
forward export sales for 2019-20 stand at 1.353 million RB. 

   Net all-cotton weekly export sales for both marketing years were about as 
expected at 218,100 RB, including 194,300 RB for 2018-19 and 23,800 RB for 
2017-18, which ended July 31. Carried over from 2017-18 were 1.565 million RB, 
including 37,000 of Pima. 

   Upland net sales of 176,600 RB for 2018-19 reflected gross sales of 205,600 
RB and cancellations of 29,000 RB. Sales went to 14 countries, led by Vietnam, 
Thailand, China, Turkey and Bangladesh. 

   All-cotton shipments of 276,100 RB for the period ended July 31 boosted 
2017-18 exports to 15.442 million RB, up 7% from 14.414 million RB the prior 
year. Shipments went to 20 countries, headed by Vietnam, China, Turkey, 
Indonesia and Bangladesh. Exports for the first two days of the new season were 
48,800 RB, including 43,100 of upland. 

   Converted to statistical 480-pound bales, the RB 2017-18 shipments would 
indicate those exports fell something like 290,000 SB shy of USDA's July 
forecast of 16.2 million. Slowed shipments as the end of the season approached 
had suggested exports wouldn't make the estimate. 

   Meanwhile, mills hiked their total unpriced on-call sales for the fifth 
consecutive week as of Aug 3, adding 177 lots to nudge them to 156,505, weekly 
data reported by the Commodity Futures Trading Commission showed after the 
close Thursday. 

   Producers priced 967 lots to reduce theirs to 47,729 lots. The net call 
difference thus rose by 1,144 lots to 113,776, 42.43% of the rising open 
interest, down from 43.17%. The biggest mill activity was the pricing of 1,677 
lots in December 2018, and the biggest producer activity featured the pricing 
of 1,352 lots in December 2019. 

   Looking to the key USDA August supply-demand report, set for release at 11 
a.m. CST on Friday, analysts and traders surveyed by Bloomberg News projected 
on average a U.S. crop forecast of 18.39 million bales, down from USDA's July 
forecast of 18.5 million. Trade estimates ranged from 18 million to 19 million 
bales, down from 20.92 million in 2017-18. 

   The USDA slashed its July crop forecast a million bales from the June 
projection, largely on higher abandonment seen in the Southwest -- despite 
expectations for plantings there of 8.2 million acres, up 9% from 2017, the 
highest since 1980 and 62% of the U.S. upland area -- owing to limited rainfall 
through June. 

   In July's analytical crop forecast, USDA used the June planted area estimate 
and based the harvested area on 10-year average abandonment by region, with the 
Southwest adjusted to 35% on weather conditions. Yield estimates were based on 
five-year average yields by region. 

   A focal crop point now will be the state-by-state estimates and the forecast 
for top-producing Texas, where non-irrigated acres last year accounted for 
65.59% of the statewide upland planted area and 61.36% of the harvested upland 
acreage. Dryland acres produced 48.67% of the crop. 

   U.S. ending stocks are projected in the Bloomberg survey at an average of 
3.86 million bales and exports at 15.08 million bales, compared with USDA's 
July forecasts of 4 million and 15 million, respectively. 

   Globally, ending stocks are seen at 77.31 million bales, down from USDA's 
77.84 million, with consumption of 126.79 million bales outpacing production of 
119.73 million bales. The USDA's July estimates put mill use at a record 126.95 
million bales, partly on additional growth expected in the world economy, and 
production at 120.11 million bales. 


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