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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 
80.93 cents. 

   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 
54.03 cents. 

   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 
771,000 bales. 

   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. 


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