DTN Cotton Close: Ekes Out Mostly Fractional Gains

U.S. export commitments for 2017-18 stand 16% above sales a year ago and 109% above USDA’s new estimate, while forward sales are 33% of the 2018-19 forecast. Shipments are 83% of the upwardly revised estimate. China’s import quota for calendar 2018 came in below expectations.

Cotton futures bounced late in the session to close a second day on mostly fractional gains in 2018-19 marketing year contracts.

Spot July settled down a second day, down 40 points to 93.41 cents, slightly below the midpoint of its 189-point range from up 69 points at 94.50 to down 120 points at 92.61 cents. July options expire Friday, after which first notice day will be five trading sessions ahead.

December eked up three points to close at 92.96 cents, in the upper quarter of its 171-point range from down 131 points at 91.62 cents to up 40 points at 93.33 cents. It posted the low in the overnight session and the high shortly before release of the weekly export sales report.

Weather forecasts show chances for showers and thunderstorms in the Lubbock area on the Texas Plains extending from this weekend into next week. Isolated thunderstorms were termed again possible in the northern area Thursday afternoon.

Volume slowed to an estimated 48,800 lots from 73,185 lots the previous session when spreads accounted for 48,769 lots or 67%, EFS 663 lots and EFP 788 lots. Options volume declined to 11,314 lots (6,041 calls and 5,273 puts) from 15,657 lots (9,507 puts and 6,150 puts).

Net U.S. all-cotton export sales for this season and next topped expectations at 301,600 running bales during the week ended June 7. Old-crop sales were 42,500 RB and new-crop sales were 259,100 RB.

Commitments of 16.934 million RB for 2017-18 — outstanding sales of 3.982 million RB plus shipments were 2.381 million RB or 16% above cumulative sales a year ago and 109% of USDA’s upwardly revised forecast. Cumulative sales last year were 100.5% of final 2016-17 exports.

Bookings for 2018-19 rose to 4.92 million RB, widening the lead over forward sales a year ago to 1.449 million RB or 42%, and were 33% of USDA’s unchanged export projection. Forward sales last year were 22% of the current 2017-18 estimate.

Shipments remained strong at 469,200 RB, though down from the prior week’s marketing year high of 584,800 RB. Exports for the season were up 5% from a year ago and totaled 83% of the USDA estimate. Shipments at the corresponding point last season were 85% of final exports.

To achieve the USDA estimate, shipments of upland and Pima or extra-long staple cotton combined need to average roughly 333,500 RB per week.

Meanwhile, China announced a sliding tariff rate import quota of 800,000 metric tons (3.674 million 480-pound bales) for calendar 2018, Reuters reported. This is in addition to 894,000 tons (4.106 million bales) of low tariff rate quota issued annually as part of China’s commitments to the World Trade Organization.

The additional quota will be allocated in its entirety to privately owned spinning mills, the National Development and Reform Commission said on its website. A new quota had been widely anticipated, but many in the market had expected it to be for a million tons (45.59 million bales).

Certified stocks grew 1,118 bales to 80,590 on Wednesday, according to the daily ICE report. Awaiting review were 1,357 bales, including 693 bales at Houston and 664 bales at Memphis. Open interest expanded 1,005 lots to 310,613, with July’s down 12,042 lots to 44,199 and December’s up 9,229 lots to 196,540.

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