DTN Cotton Close: Plunges in July, Dips Slightly in December
U.S. export commitments for 2013-14 reached 105% of the USDA estimate and shipments totaled 92%. Forward bookings for 2014-15 stand at 25% of the USDA projection.
Cotton futures plunged in July and finished just below unchanged in December as the old-crop premium narrowed sharply Thursday after posting new closing highs two days in a row.
July fell 279 points to close at 88.36 cents, in the lower quarter of its wide 343-point trading range from up eight points at 91.23 to down 335 points at 87.80 cents.
Most-active December closed off six points to 77.13 cents, in the upper third of its 132-point range from down 104 points at 76.15 to up 28 points at 77.47 cents.
The inverted July-December straddle fell to the low of its 372-point range in the late going and narrowed 273 points on the closing difference of 1,123 points.
Volume rose to an estimated 28,200 lots from 24,656 lots the previous session when spreads totaled 8,712 lots or 35%, EFS 1,006 lots and EFP 575 lots. Options volume totaled 2,378 calls and 1,838 puts.
Net U.S. all-cotton export sales for shipment this season of 155,200 running bales during the week ended June 12, up from 42,500 bales the prior week, boosted 2013-14 commitments to 10.668 million RB.
Commitments, down 2.696 million bales or about 20% from a year ago, reached about 105% of the USDA estimate, compared with around 106% of final shipments at the corresponding point last season.
All-cotton shipments slowed to 132,000 running bales from 189,700 bales the week before, with upland shipments of 119,800 bales down 35% from the previous week and 37% from the prior four-week average.
Shipments for the season of 9.347 million bales trailed exports a year ago by 2.315 million bales or also by about 20%. Exports were about 92% of the USDA projection, also about the same as the percentage of final exports a year ago.
To achieve the estimate, all-cotton shipments need to average roughly 139,700 running bales a week.
The USDA earlier this month raised its 2013-14 export estimate slightly to 10.5 million statistical 480-pound bales, down 2.5 million bales from last season largely because of limited supply.
Net all-cotton sales for shipment next season rose to 103,500 running bales from 74,700 bales the previous week, hiking 2014-15 commitments to 2.345 million RB.
New-crop commitments, up 343,000 bales or about 17% from forward sales last year, have reached about 25% of the USDA projection. A year ago, forward sales were 20% of the current 2013-14 export estimate.
The USDA export forecast for 2014-15 of 9.7 million bales, down 800,000 bales or about 8% from this season, is viewed as conservative, especially if favorable U.S. crop prospects remain on track.
Despite larger U.S. supplies foreseen for next season, a lower world trade — particularly imports by China — contributed to USDA’s lower export forecast. The U.S. share of 2014-15 global trade is projected at 27%, up slightly from 2013-14.
While U.S. exports are projected to decline next season, domestic mill use is expected to rise about 3% to 3.7 million bales. The textile industry remains very competitive, USDA analysts say, and increased capacity is expected to be in place in 2014-15.
Futures open interest fell 5,816 lots Wednesday to 167,817, with July’s down 5,958 lots to 26,051 and December’s down 158 lots to 121,746. Cert stocks grew 6,999 bales to 427,727. There were 7,289 newly certified bales, 290 bales decertified and 23,370 bales awaiting review.
World values as measured by the Cotlook A Index gained 95 points to 93.70 cents. The premium to Wednesday’s July futures settlement narrowed 14 points to 2.55 cents.
Forward A Index values for 2014-15 gained 85 points to 84.45 cents, widening the discount to the 2013-14 index by 10 points to 9.25 cents and narrowing the premium to Wednesday’s December futures close by two points to 7.26 cents.
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