U.S. weekly export sales expected to show slowdown from the second largest of the crop year but remain above the average needed to match the USDA forecast. China boosted early-season imports.
Cotton futures rallied from a modest loss at the overnight low to a triple-digit gain before noon CDT and settled in the upper quarter of the trading range to snap a six-session losing streak Wednesday.
Spot December finished up 77 points to 69.62 cents, a four-session high settlement. It traded from down 27 points at 68.22, holding above the prior-day low for the first time in six sessions, to up 139 points at 69.88 cents, above the previous two daily highs.
March gained 85 points to settle at 69.87 cents, while December 2017 rose 54 points to close at 69.23 cents.
Volume increased to an estimated 27,705 lots from 23,497 lots the previous session when spreads accounted for 12,485 lots or 53% and EFP 133 lots. Options volume totaled 2,511 calls and 1,352 puts.
Slower U.S. export sales for the week ended Oct. 20 generally are expected to be reported by USDA at 7:30 a.m. CDT Thursday.
Still, sales are expected to maintain a pace above the weekly average needed to match the USDA export forecast. Net upland sales the prior week for shipment this season were the second largest of the marketing year at 340,200 running bales.
Closing futures prices for the reporting week ended Thursday ranged between 69.80 and 71.19 cents, basis December. Upland sales for the previous four weeks averaged 204,400 RB and upland shipments averaged 161,600 RB.
The USDA this month boosted its estimate of overall demand for U.S. cotton this season by 500,000 bales from the September projection to 15.5 million, nearly 3 million bales above the 2016-17 offtake.
Exports accounted for the increase and are now projected at 12 million bales. This month’s higher global import demand, coupled with larger U.S. production this season, is contributing to the highest export forecast in four years.
Also, USDA says, relatively large U.S. 2016-17 carry-in stocks compared with most competitors have boosted early-season export sales. The U.S. share of global trade is forecast at 34%, up from 26% last season and the highest since 2010-11 when it was 41%.
Separately, China’s cotton imports in September rose 19% from a year earlier to 60,384 metric tons or 277,338 480-pound bales, customs data showed earlier this week.
This brought imports for the calendar year to 654,214 tons or 3.005 million bales, down 44% from the previous nine-month period.
For the first two months of the 2016-17 marketing year, China imported 129,646 tons or 595,451 bales, up 7.8% from 120,299 tons or 552,523 bales during the corresponding period last season.
The USDA this month projected China’s imports at 4.5 million bales, unchanged from its September forecast and up 2% from 4.41 million bales in 2015-16.
Futures open interest edged up 99 lots Tuesday to 260,503, with December’s down 2,304 lots to 142,058 and March’s up 2,408 lots to 79,569. Certified stocks were unchanged at 26,393 bales.