Analysts projected U.S. 2017-18 production at an average estimate of 18.83 million bales within a wide range from 18 million to 19.65 million bales. Downward revision expected in 2017-18 beginning stocks.
Cotton futures meandered largely within prior-day price ranges and settled with marginal losses in lackluster activity Wednesday.
December closed down two ticks to 71.11 cents, near the high of its tight 79-point range from up seven points at 71.20 to down 72 points at 70.41 cents. It nudged a tick above Monday’s high but couldn’t generate much momentum in either direction.
March settled down three ticks to 70.76 cents, just off the high of its narrow 66-point range from 70.82 to 70.16 cents. October eased nine points to settle at 71.82 cents.
Volume dipped to an estimated 19,415 lots from 20,272 lots the prior session when spreads accounted for 8,367 lots or 41% and EFS 60 lots. Options volume dropped to 1,999 lots (585 calls and 1,414 puts) from 3,597 lots (759 calls and 2,838 puts).
Analysts surveyed by The Wall Street Journal projected U.S. 2017-18 cotton production at an average estimate of 18.83 million bales, down from 19 million bales foreseen by USDA last month.
Estimates ranged from 18 million to 19.65 million bales. The USDA’s first 2017-crop forecast based on field surveys is scheduled for release at 11 a.m. CDT on Thursday, preceded by weekly export sales-shipments at 7:30 a.m. CDT.
Analysts estimated 2017-18 exports at an average of 13.65 million bales within a range of 13.5 million to 14 million bales. This compares with USDA’s July forecast of 13.5 million bales, a million bales below its estimate for 2016-17. Domestic cotton mill use, projected by USDA at 3.4 million bales last month, wasn’t included in the survey.
Ending stocks estimates averaged 4.8 million bales, 500,000 bales below USDA’s forecast, and ranged from 4.12 million to 5.65 million bales. An upward revision in 2016-17 ending stocks — not included in the survey — could pull the old-crop carryout down from USDA’s 3.2 million bales.
Old-crop exports as of July 27 already had exceeded last month’s export projection with four days left in the marketing year. Some trade estimates have indicated 2016-17 exports may top the USDA estimate by 300,000 to 400,000 bales and lower ending stocks to 2.8 million to 2.9 million bales.
Ending stocks have been below 3 million bales only four times in the last 20-plus years. Beginning 2017-18 stocks as low as 2.8 million bales would be considered an unusually tight amount needed to meet export and domestic mill demand prior to volume movement of the new crop.
World 2017-18 ending stocks are expected to decline slightly from the July forecast of 87.73 million bales, with consumption exceeding production for the third consecutive season. World stocks outside China will command attention.
While China still held the largest share (44%) of global stocks in the latest USDA estimates, its 2017-18 ending stocks were projected to decline more than 9 million bales (19%) to 39.3 million bales, lowest in six years. But rising stocks in the “rest of the world” generally were expected to offset most of the decline in China.
Futures open interest grew 2,129 lots to 219,092 on Tuesday, with December’s up 50 lots to 151,861 and March’s up 1,071 lots to 46,897. Certified stocks declined 2,203 bales to 20,135.