Jump forecast in global cotton mill use helped to fuel advance. Mills’ unpriced on-call sales declined 2,061 lots in December. U.S. cotton remained in tight competitive price position in the Far East.
Cotton futures settled higher Friday, finishing moderately ahead in December and on its third weekly gain in a row for a total of 217 points.
December gained 76 points to close at 69.05 cents, near the high of its 83-point range from up six points at 69.18 to up 89 points at 68.35 cents. It was up a modest 33 points for the week.
March finished up 60 points to 69.14 cents, trading on the plus side throughout the session within a narrow 61-point range from 68.64 to 69.25 cents and gaining 37 points for the week. The other contracts settled up 33 to 54 points.
A 1.24-million-bale jump to 119.25 million bales in world cotton consumption in USDA’s monthly supply-demand estimates helped to fuel the futures advance. That’s up 5.03 million bales or 4.4% from last season and would be the largest global cotton mill use since 2013-14.
Volume dipped to an estimated 51,217 lots from a cleared 67,744 lots the prior session when spreads accounted for 43,376 lots or 64%, EFS 4,750 lots and EFP 93 lots. Options volume slowed to 5,235 lots (2,246 calls and 2,989 puts) from 7,750 lots (2,605 calls and 5,145 puts).
Scale mill pricing has continued to offer support in December on pullbacks. Mills stepped up the pricing or rolling forward of December on-call sales to 2,061 lots last week.
The unpriced December sales declined to 18,373 lots, according to Commodity Futures Trading Commission call data released after the close Thursday. This was five trading sessions ahead of the expiration of December options and 14 sessions prior to first notice day.
Producers priced or rolled 901 lots to shave their unpriced position to 11,962 lots. The net call difference thus declined 1,160 lots to 6,411, which was 6.6% of December’s declining open interest. Mills had 1.54 contracts to fix or roll for every one by producers.
Unpriced positions in March rose by 1,720 lots to 44,988 for mills and 705 lots to 7,977 for producers, with the rising net difference of 37,011 lots making up 39.5% of March’s expanding open interest.
On the competitive-pricing front, the average of the five lowest-priced world growths for the Far East edged up 33 points to 78.43 cents for the marketing week ended Thursday, according to USDA, while the lowest-quoted U.S. cotton of comparable quality landed there gained 20 points to 78.35 cents.
The U.S. growth thus moved to an eight-point discount from a five-point premium, remaining in a tight competitive relationship. The adjusted world price is figured at 61.38 cents for the marketing week ending next Thursday, which of course means a zero marketing loan gain.
The fine count adjustment for 2017-crop qualities better than 31-3-35 is 0.51 of a cent, reflecting differences between premiums in the U.S. and international markets.
Futures open interest declined 3,335 lots to 233,372 on Thursday, with December’s down 12,439 lots to 63,439 and March’s up 6,640 lots to 115,949. Certified stocks grew 5,000 bales to 46,922.