By Duane Howell DTN Cotton Correspondent
February 6, 2018
Traders kept an eye on outside markets as weekly export sales, updated supply-demand estimates, March options expiration and results of the NCC planting intentions survey loom. Slightly higher world ending stocks forecast by ICAC. Cotton futures settled mixed Tuesday, down modestly for the third straight losing session in old-crop deliveries and up marginally in new-crop contracts.
Spot March dropped 38 points to close at 76.19 cents, a new low finish since Dec. 20 and in the lower half of its 95-point range from up 23 points at 76.80 cents to down 72 points at 75.85 cents. May lost 52 points to settle at 77.38 cents, in the lower quarter of its 86-point range from 78.10 to 77.24 cents, and July slipped 47 points to finish at 78.37 cents. New-crop December inched up 12 points to 74.87 cents, trading within a 68-point range from 74.99 to 74.31 cents.
U.S. equities took another wild ride, with the Dow Jones Industrial Average up more than 500 points in volatile late afternoon trading. Volume increased to an estimated 62,200 lots from 60,694 lots on Monday when spreads accounted for 38,303 lots or 63%, EFS 1,600 lots and EFP 278 lots. Options volume quickened to 16,090 lots (7,156 calls and 8,934 puts) from 5,872 lots (2,412 calls and 3,460 puts). Traders, while keeping an eye on outside markets, looked to the beginning of the Goldman Sachs index fund roll or liquidation of March longs on Wednesday, weekly U.S. export sales data and updated supply-demand estimates on Thursday and expiration of March options on Friday.They also will be keeping an eye out for results of the National Cotton Council’s survey of planting intentions set for release at the NCC’s annual industrywide meeting on Saturday in Fort Worth.
Favorable prices for cotton in relation to other acreage-competing crops during the survey period generally are expected to show producers intend to plant more cotton this spring. Some private estimates and surveys thus far have ranged mostly from 13.2 million to 13.5 million acres, up from 12.61 million aces last year. Meanwhile, world 2017-18 ending stocks are projected at 18.88 million metric tons (86.71 million 480-pound bales) by the International Cotton Advisory Committee, up slightly from 18.74 million tons (86.07 million bales) last season.
The USDA last month forecast world ending stocks this season at 87.79 million bales, up from 87.64 million last season. Some other world cotton watchers have insisted that USDA has overestimated ending stocks — mainly in China and India — by a larger margin. Converted to statistical bales, the ICAC forecast world production at 117.17 million bales this season and consumption at 116.52 million, up from 105.55 million and 112.76 million, respectively, last season.
The ICAC expects production to exceed consumption by 650,000 bales, compared with a crop shortfall last season of 7.21 million bales. The USDA’s January estimates put world production 140,000 bales more than mill use this season and 8.21 million bales below consumption last season.
Futures open interest declined 1,732 lots to 298,177 on Monday, with March’s down 7,101 lots to 106,124 and May’s up 1,881 lots to 97,084. Certified stocks increased 370 bales to 73,016. Awaiting review were 700 bales at Memphis. (Source: Agfax.com)