DTN Cotton Close: Finishes on Weekly Gain of 5.4% in May

©Debra L Ferguson Stock Photography

U.S. all-cotton weekly export sales for both crop years rose to 579,900 RB. Shipments climbed to 402,700 RB. Exports projected to rise to 16 million bales next season. Smaller crop forecast for 2018-19.

Cotton futures finished strongly ahead Friday, with most-active May settling on its highest close since Jan. 25 following another round of expectations-topping U.S. weekly export sales.

May closed up 187 points to 81.34 cents, near the high of its 205-point range from down 10 points at 79.37 to up 195 points at 81.42 cents. It gained 187 points or 5.4% for the week.

Maturing March settled up 91 points to 81.45 cents and July finished up 166 points to 82.07 cents. December hit a new contract high at 76.68 cents and closed up 24 points to 76.60 cents.

Volume increased to an estimated 29,600 lots from 27,486 lots the previous session when spreads accounted for 12,758 lots or 46% and EFP 17 lots. Options volume rose to 6,916 lots (3,688 calls and 3,288 puts) from 1,941 lots (1,001 calls and 940 puts). The daily trading limit reverted Friday to 300 points.

Net all-cotton export sales for shipment this season came in at a stout 402,700 running bales for the week ended Feb. 15, up from 367,600 RB the prior week and 380,700 RB for the corresponding week last season.

General expectations had been for sales to slow because of Lunar New Year holiday influences in China, but China topped a list of broad-based demand from 20 countries.

Commitments — outstanding sales of 7.663 million RB plus shipments — reached 13.384 million RB, maintaining a lead of about 21% over cumulative year-ago sales and rising to 95% of the USDA export forecast. Year-ago commitments were about 76% of final 2016-17 shipments.

New-crop sales of 177,200 RB boosted the total for both crop years to 579,900 RB, up from 498,400 RB the week before. Commitments for 2018-19 rose to 2.038 million RB, compared with 999,400 RB in forward bookings a year ago.

Sales on the books for next season already have reached about 13% of the new-crop export projection unveiled Friday at the USDA Agricultural Outlook Forum. Forward bookings a year ago were about 7% of the current 2017-18 export estimate.

All-cotton shipments quickened to 402,700 RB from 367,600 the prior week and brought the total for the season to 5.721 million RB, 531,000 RB behind year-ago exports. Shipments have reached about 41% of the USDA estimate, compared with 43% of final exports last year.

To achieve the USDA estimate, shipments need to average roughly 362,800 RB per week over the 23-plus weeks remaining in the marketing year, while sales are within 681,000 RB of matching the export forecast.

At the Outlook Forum, USDA projected U.S. 2018-19 harvested acreage at 11.3 million, an abandonment rate of 15% off plantings of 13.3 million acres, and forecast yields of 828 pounds and a crop of 19.5 million bales.

(The figures are for all cotton, not just for upland as incorrectly reported for the planted area in the closing comments here Thursday.)

The 2018-19 projections compared with 2017-18 estimates are up 5.5% from 12.61 million acres in the planted area, down 0.4% from 11.35 million acres (an abandonment rate of 10%) in the harvested area and down 7.9% from 899 pounds in yields.

Domestic mill use is projected at 3.4 million bales, up 1.5% from 3.35 million estimated for this season, with a total market offtake of 19.4 million bales, up 8.7% from 17.85 million. Ending stocks are forecast unchanged at 6 million bales, reflecting a stocks-to-use ratio of 30.9%, down from 33.6%.

Futures open interest expanded 3,729 lots to 256,700 on Thursday, with March’s down 270 lots to 781 and May’s up 1,901 lots to 128,325. Certified stocks were unchanged at 93,388 bales. Awaiting review were 1,014 bales at Galveston.

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