DTN Cotton Close: Gives Back Bulk of 3-Day Gains

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    Fears of hurricane crop damage lessened. States of emergency remain for Florida, Georgia and the Carolinas. Improvement from marketing year low expected in U.S. weekly export sales. ICAC October estimates eyed.

    Cotton futures skidded to heavy closing losses Wednesday, giving back the large bulk of gains from a three-day string of higher prices as fears of potential storm damage to crops in the Southeast lessened.

    Benchmark December closed down 185 points to 67.82 cents, near the low its 247-point range from up 33 points at 70 cents to down 214 points at 67.53 cents. It gave up all but nine points of the three-day advance.

    March lost 174 points to close at 68.36 cents, while December 2017 shed 112 points to settle at 68.92 cents.

    Volume rose to an estimated 23,581 lots from 19,105 lots the previous session when spreads accounted for 5,391 lots or 28%, EFS 125 lots and EFP 1,138 lots. Options volume totaled 2,772 calls and 2,057 puts.

    Hurricane Matthew churned on a path projected to come close to Florida’s coast Thursday evening, move along the coastline and veer to the east, away from the coasts of the Carolinas Sunday and out into the Atlantic.

    Updated models predicted the storm won’t make landfall on the continental United States. Earlier models had predicted the storm would make landfall somewhere close to the border of South Carolina and North Carolina.

    Governors of Florida, Georgia and the Carolinas still were taking no chances, with states of emergency declarations remaining in force. Only a small deviation to the left or right of the projected track could make a major difference in the storm impact, forecasters said.

    Meanwhile, U.S. upland export sales generally are expected to show some improvement for the week ended Sept. 29 following a slump to a marketing year low of 91,600 running bales the previous week, a period in which December futures traded to a six-week high of 72.36 cents.

    However, some analysts also say sales may not hold the robust pace experienced thus far this young marketing year as the Northern Hemisphere harvest begins replenishing depleted market pipelines, though hefty on-call mill fixations would be expected to offer support.

    The weekly USDA report is set for release at 7:30 a.m. CDT Thursday. Net upland sales have averaged 192,600 RB a week the last four weeks, with all-cotton sales topping the pace required to match the USDA export forecast. Upland shipments have averaged 165,100 RB.

    In its updated October supply-demand estimates, the International Cotton Advisory Committee projected 2016-17 world cotton trade at 7.41 million metric tons (34.03 million 480-pound bales), up from 7.23 million tons (33.2 million bales) in 2015-16.

    U.S. exports are projected to increase 23% to 2.5 million tons (11.48 million bales), while exports from India, the second largest exporter, are forecast to fall by 35% to 820,000 tons (3.77 million bales).

    Bangladesh is expected to remain the world’s largest importer as its volume increases by 10% to 1.2 million tons (5.51 million bales) to satisfy growing demand. Similarly, Vietnam’s imports are projected to rise by 15% to 1.1 million tons (5.05 million bales).

    The ICAC increased its world production estimate slightly to the equivalent of 103.53 million bales and left its consumption forecast at 109.36 million bales, resulting in a crop shortfall of 5.83 million bales.

    Global ending stocks are forecast to fall 6.6% from last season to a converted 83.13 million bales, 76% of projected consumption.

    Futures open interest expanded 1,138 lots Thursday to 248,637, with December’s up 151 lots to 157,895 and March’s up 767 lots to 56,414. Cert stocks declined 32,054 bales to 30,421. There were 89 newly certified bales and 2,143 bales decertified.




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