DTN Cotton Close: Settles Mixed as Old Crop Slips

    ©Debra L Ferguson Stock Images

    World cotton production projected up 2% next season in the first 2017-18 ICAC estimates. Mills added a net 613 lots to their unpriced 2016-17 on-call position.

    Cotton futures settled mixed Friday, finishing lower in 2016-17 marketing year deliveries and higher in 2017-18 contracts.

    Spot March lost 50 points to close at 76.41 cents, near the low of its 103-point range from down 79 points at 76.21 to up 24 points at 77.15 cents. It completed an inside day, trading within the prior-day range and snapping a three-session string of higher closes.

    May also shed 50 points, settling at 77.07 cents, and July closed down 41 points to 77.77 cents. December gained 40 points to finish at 73.99 cents. For the week, the market gained 156 points in March, 168 points in May, 187 points in July and 40 points in December.

    Volume dipped to an estimated 49,783 lots from 69,012 lots the previous session when spreads accounted for a bulging 41,434 lots or 60%, EFP 228 lots and EFS 110 lots. Options volume totaled 10,708 lots — 6,967 calls and 3,741 puts.

    In its first 2017-18 world cotton forecasts, the International Cotton Advisory Committee has projected an increase of 2% in production.

    The forecasts, converted to 480-pound statistical bales from metric tons, showed projected world cotton output at 107.43 million, up from 104.95 million in 2016-17.

    Planted area is expected to grow 5% to 30.6 million hectares or 75.6 million acres after two seasons of contraction. Yields are projected to decline 2% to 764 kilograms per hectare after improving 13% to 781 kg/ha in 2016-17.

    World cotton mill use may expand 1% to 111.56 million bales after remaining essentially stable this season as prices discouraged consumption, the ICAC report indicated.

    Consumption is forecast to remain basically flat in the top three consuming countries of China, India and Pakistan. However, it’s projected to grow in Turkey, Bangladesh and Vietnam, respectively.

    Given continued growth in mill use in countries that depend on imports, world cotton trade is projected to rise 5% to 37.7 million bales. With a large exportable surplus and strong demand, exports from the United States are forecast to rise 17% to 14.7 million bales.

    With ending stocks are projected to fall to 78.7 million bales, the ICAC projections would put the world stocks-to-use ratio at a still-hefty 70.5%, down from 74.8% this season.

    Meanwhile, mills added a net 613 lots to their unpriced on-call position in 2016-17 contract months last week and producers priced 233 lots, according to data reported by the Commodity Futures Trading commission after the close Thursday.

    Unfixed positions rose to 94,591 lots for mills and dipped to 8,764 for producers, with the net call difference rising 831 lots to 85,827, 34.86% of the 2016-17 open interest.

    Futures open interest increased an additional 4,312 lots Thursday to 287,059, with March’s down 3,650 lots to 148,491 and May’s up 4,312 lots to 68,665. Cert stocks grew 10,512 bales — 2,599 at Galveston and 7,913 at Memphis — to 205,230.

    CORRECTION: Net export sales averaging roughly 74,300 running bales a week now would match USDA’s 2016-17 export forecast. The average was incorrectly reported here Thursday. Current supplies beyond that average will be required to meet 2016-17 commitments early in the next marketing year ahead of volume movement of the new crop.

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