DTN Cotton Close: Extends Losses to 3rd Day

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    Talk circulated that a 176.6% preliminary anti-dumping tariff China imposed on U.S. sorghum might result in a planting shift to cotton. Traders will be on the lookout for any new cotton sales cancellations in the weekly export sales report.

    Cotton futures finished on slight losses for a third day Wednesday, with most-active July completing an inside-range day and extending its reversal off a seven-session high on Monday.

    July settled down 34 points to 82.61 cents, in the lower half of its 87-point range from up 22 points at 83.17 to down 35 points at 82.30 cents. It closed back below its nine-day moving average.

    May finished down 39 points to 82.74 cents, trading from 83.39 cents to 82.50 cents. December eased eight points to close at 78.32 cents, in the lower third of its 57-point range after pushing three ticks above the prior-day high.

    A 176.6% preliminary anti-dumping tariff China slapped on U.S. sorghum spawned talk that the move might result in a U.S. planting shift to cotton from sorghum.

    Volume slowed to an estimated 28,900 lots from 41,319 lots the previous session when spreads accounted for 19,976 lots or 48%, EFP 939 lots and EFS 396 lots. Options volume slipped to 8,943 lots (5,930 calls and 3,013 puts) from 9,213 lots (4,436 calls and 4,777 puts).

    Traders will be on the lookout for any new cancellations in the U.S. export sales report on Thursday. Otherwise, a sales rebound is expected from the prior week when cancellations — mainly for Pakistan — helped to cut net upland sales to an 11-week low and the second lowest of the crop year.

    Analysts have debated whether the cancellations originated in Pakistan or from shippers unable to fill contract quality specifications because of tightening supplies of high grades.

    U.S. 2017-18 all-cotton supplies remained estimated at 23.79 million in this month’s USDA supply-demand report, 2.81 million bales above the previous season and the largest since 2007-08. Beginning stocks were estimated at 2.75 million bales, reflecting a stocks-to-use ratio of 15.1%, lowest since 14.2% in both 2010-11 and 1995-96.

    The crop estimate remained at 21.03 million bales ahead of USDA’s final revisions on acreage, yield and production on May 10 when the annual ginning summary also will be released.

    Based on the overall strength of sales and shipments, many analysts have viewed the slight increase in the export estimate to 15 million bales as understated. The estimate is marginally above last season and the second largest behind only 17.67 million bales in 2005-06.

    As of April 5, U.S. commitments of 15.616 million running bales topped a year ago by 16% and were 107% of the new export forecast, up from 93% of final 2016-17 shipments at the corresponding period last season.

    Outstanding all-cotton sales of 6.722 million RB were 43% of the commitments. Shipments of 8.894 million RB lagged year-ago exports by 3% and were 61% of the estimate, behind 63% of the final a year ago.

    Some commitments traditionally are rolled into the next crop year, and USDA says cancellations of some sales remain a possibility. The U.S. share of global trade is estimated at 38%, compared with 40% last season.

    Net upland sales the last four weeks have averaged 297,400 RB per week, compared with 349,600 the previous four weeks, and shipments have averaged 453,900 RB, up from 387,700 RB. Prices during the reporting week ended April 12 ranged from 81.44 cents to 83.61 cents, basis July.

    Certified stocks increased 3,263 bales to 71,797 on Tuesday. Futures open interest declined 5,332 lots to 263,078, with May’s down 5,841 lots to 14,523, July’s down 906 lots to 129,734 and December’s up 1,297 lots to 94,893.

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