Weekly Cotton Comments 12/14 05:39
Cotton Chops Within Last Friday's Price Range
U.S. export sales fell to a six-week low, but commitments stood at 71% of
USDA's 2018-19 export estimate. U.S. and world ending stocks rose. Texas crop
hiked 300,000 bales. Strong winds on Texas High Plains threatened to dislodge
stringing cotton after heavy snow. U.S. upland classing reported down 12.9%
from a year ago. Hedge funds upped net longs. Mills added 418 lots to total
unpriced on-call sales.
By Duane Howell
DTN Cotton Correspondent
Cotton futures continued a sideways chop this week, dipping to a
four-session low amid weak export sales after shrugging off a mildly surprising
increase in U.S. production and an unexpected slight boost in world ending
stocks in USDA's monthly supply-demand estimates.
Spot March managed a slight 33-point gain for the marketing week ended
Thursday, settling at 79.41 cents. It remained within the daily range of last
Friday and finished in the lower third of that 213-point span from 78.80 to
The lead month finished just below the middle (79.59) of a watched 482-point
range from 82 cents, touched on Sept. 18 and again on Nov. 8, to 77.18 cents,
posted on Nov. 26 following a low of 77.20 the previous session.
May edged up 17 points to close at 80.43 cents as its premium to March
narrowed 16 points to 1.02 cents, while July dipped 10 points to settle at
81.02 cents and "red" December eased five ticks to finish at 77.43 cents.
Cash online sales slowed to 30,167 bales from a crop year high of 65,720
bales. Prices eked up 37 points to an average of 73.76 cents per pound. Daily
price averages ranged from 72.46 to 74.42 cents. Loan values averaged 52.71
cents, down from 52.86 cents. Averages on daily turnovers ranged from 51.35 to
Net U.S. all-cotton export sales for shipment this season slipped to a
six-week low at 58,000 running bales during the week ended Dec. 6, with net
upland sales of 47,100 RB down 50% from the prior week and 66% from the
four-week average, USDA's weekly export report showed.
All-cotton commitments reached 10.271 million RB, down 3% from a year ago
but -- thanks to record carry-in sales -- 71% of the December export forecast.
A year ago, commitments were 68% of final shipments.
Shipments of upland and Pima combined slowed to 166,100 RB from 174,900 the
prior week, with upland exports of 154,500 RB down 3% for the week but up 13%
from the four-week average. All-cotton exports were up 8% from a year ago and
20% of the USDA projection. Year-ago exports stood at 18% of final shipments.
Net sales for next season fell to 33,500 RB from 80,500 RB the prior week,
but 2019-20 commitments of 2.084 million RB still held a lead of 969,000 RB
over forward sales at the corresponding point last season.
The market initially dipped on USDA's monthly supply-demand estimates, but
bounced to finish fractionally ahead for the day as uncertainty and confusion
on the U.S.-China tariff war persisted.
U.S. all-cotton production rose by 180,000 bales from the November forecast
to 18.588 million, up 307,000 bales from the average estimate of analysts
surveyed by Bloomberg News. All the USDA increase was in upland production, now
pegged at 17.817 million bales. The Pima estimate was carried forward at
Exports and domestic mill use estimates were unchanged, as generally
expected. Ending stocks increased 100,000 bales to 4.4 million, while most
expectations had been for a slight decrease. The season-average farm price
projection was unchanged at 74 cents per pound.
The biggest surprise was a 300,000-bale increase to 7 million in the Texas
upland forecast, still down from 9.27 million bales last year. Most trade
estimates had been unchanged to down slightly, based on conditions around Dec.
The Texas High Plains forecast rose by 80,000 bales to 4.25 million, 61% of
the statewide output, while the estimate for the Coastal Bend jumped 185,000
bales to 675,000. Other districts in southern Texas showed small increases and
estimates elsewhere in the state were unchanged.
By regions, upland crop estimates dropped 85,000 bales to 4.225 million in
the Southeast, where Georgia lost 50,000 bales to 1.9 million; edged up 30,000
bales in the Mid-South, mainly on a 20,000-bale increase to 1.48 million in
Mississippi; rose by 250,000 bales in the Southwest; and dipped 15,000 bales to
785,000 in the West. If realized, record high yields would be achieved in
California (1,910 pounds per acre) and Missouri (1,275 pounds).
Globally, USDA boosted ending stocks 580,000 bales to 73.19 million, now
down 7.26 million bales from beginning stocks. Projected consumption fell 1.25
million bales to 125.63 million, largely on a million-bale cut to 41.5 million
bales for China, but mill use also was lowered in Pakistan, Turkey and
World production dropped 650,000 bales to 118.74 million, with smaller crops
in Pakistan, China, Turkmenistan and Turkey more than offsetting a million-bale
increase to 11 million in Brazil and smaller increases in the United States and
Cote d'Ivoire. The production shortfall narrowed 600,000 bales to 6.89 million.
Global trade increased 600,000 bales to 41.7 million, with imports up in
Pakistan, India and Malaysia and exports higher from Brazil, Argentina, Cote
d'Ivoire, India and Pakistan.
Back on the U.S. crop, the U.S. estimates of course reflected conditions
before heavy snow last weekend -- up to almost a foot fell at Lubbock, most in
the continental United States -- again stalled the Texas High Plains harvest
where an estimated 20% to 25% remained on the stalk as the winter storm neared.
Strong winds Thursday threatened to put cotton stringing from bolls on the
U.S. upland classing rose to a crop year high of 1.358 million RB during the
week ended Dec. 6 to bring the season's total to 10.305 million, down 12.9%
from 11.827 million RB graded a year ago.
Meanwhile, trend-following funds snapped a string of 17 consecutive weekly
net long reductions, buying 5,450 lots during the week ended Dec. 4 to boost
their net longs to 22,567 lots in cotton futures-options combined, according to
supplemental traders-commitments data reported by the Commodity Futures Trading
Those funds covered 4,122 shorts and added 1,328 longs to add to their net
longs for the first time since July 31. They had reduced them to the smallest
since July 18, 2017. Index funds cut their net longs 4,368 lots to 79,964,
while non-reportable traders raised theirs 2,901 lots to 4,879.
Commercials sold a net 3,982 lots, adding 4,764 shorts along with 782 longs
to hike their net shorts to 107,410 lots. Prices ranged from 77.70 to 81.85
cents, basis March. Open interest grew 3,517 lots to 270,848.
Separately, mills added 418 lots to raise their total unpriced on-call sales
to 123,736 lots during the week ended Dec. 7, their first increase in six
weeks, CFTC call data showed. Producers added 946 lots, lifting their unpriced
position to 41,079.
The net call difference narrowed 528 lots to 82,657, 37.5% of the futures
open interest. Mills' unpriced sales totaled 56.2% of the open interest. By
comparison, mills last year had 147,484 lots of unfixed on-call sales, which
were 58.3% of the OI.
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.
For more free DTN information sent right to your email each morning - click here
to sign up for DTN Snapshot.