Cotton traders and analysts spent much of this holiday-shortened week in anticipation of USDA’s monthly supply and demand estimates that were released at 11:00 a.m. CDT this morning. Ahead of the reports, many market observers were expecting USDA to raise its estimate of the U.S. crop following a surprising reduction to 13.08 million bales last month.
The latest estimate pegged the 2015 U.S. cotton crop at 13.4 million bales as USDA raised its estimate for the Texas crop by 458,000 bales. The department’s estimate of domestic consumption was unchanged from last month, but projected U.S. exports were raised to 10.2 million bales for the 2015- 16 marketing year. U.S. ending stocks are now forecast at 3.2 million bales, up 100,000 bales from last month’s estimate. Surveys of market analysts earlier this week indicated they expected the U.S. production estimate to range from 13.57 million bales to 13.78 million.
USDA lowered its estimate of world cotton production by 250,000 bales to 108.74 million and lowered its estimate of world consumption by 1.21 million bales to 113.44 million. World ending stocks are now projected at 106.26 million bales, an increase of 1.07 million from last month’s estimate.
Following the Labor Day holiday, cotton futures at the Intercontinental Exchange (ICE) traded higher throughout Tuesday’s session with December moving up to 63.68 cents per pound. The contract settled in the top half of a 106-point range at 63.28 cents, up 66 points. All other contracts also settled with moderate gains.
One analyst credited cotton’s strength Tuesday to “positive global equity markets” along with higher grain prices and a weaker dollar. Another factor mentioned was potential yield losses for India’s cotton crop due to the weak monsoon. The latest Crop Progress and Condition report from USDA showed only a slight decline in the U.S. crop’s conditions.
Futures again traded higher for most of Wednesday’s ICE session until late-day selling pressure emerged. December cotton traded in a 77-point range with light volume at ICE and settled at 62.92 cents per pound, down 36 points. Other futures contracts settled mixed as buyers seemed content to remain on the sidelines ahead of USDA’s monthly estimates.
Cotton futures returned to positive ground Thursday, and December traded as high as 63.90 cents in relatively quiet, pre-report activity. The contract settled 13 points higher at 63.05 cents per pound.
Another USDA report showed net export sales of U.S. upland cotton totaled 83,400 bales in the week ended Sept. 3, up 26 percent from the previous week. Mexico, South Korea, Turkey, and Vietnam were the top four buyers. USDA also reported export sales of 18,900 bales for delivery in the 2016-17 marketing year, and Mexico and Thailand were the featured buyers. Export shipments in the most recent week totaled 137,100 bales, down 10 percent from the previous week. Primary destinations were Vietnam, Turkey, Mexico, and Indonesia.
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