By admin       2018-06-13

U.S. 2018-19 ending stocks forecast expected to drop 400,000 bales and the world carryout to fall around 700,000 bales. Sizable old-crop U.S. export forecast also expected. Cotton futures ticked higher in early dealings Tuesday, possibly partly in anticipation of constructive supply-demand estimates from USDA later in the day. July gained 75 points to 95.53 cents, trading within a 114-point range from 94.67 to 95.81 cents on a contract volume of 2,775 lots. December edged up 34 points to 92.02 cents, trading within a 92-point range from 91.20 to 92.18 cents on a turnover of 6,285 lots. The supply-demand report, scheduled for release at 11 a.m. CDT, is expected to show a 100,000-bale reduction (different from a number reported here Monday) in U.S. production from last month’s forecast to 19.4 million, sources said a Bloomberg survey showed. Ending stocks are projected down 400,000 bales to 4.8 million. The production cut looks understated, based on some other trade estimates and on early crop conditions in Texas and expectations for big abandonment in the Southwest, a region projected to account for 61% of the U.S. upland area on its largest planted acreage since 1981. World ending stocks are expected down around 700,000 bales to 83.1 million. There are wide differences of opinion on world stocks, with the International Cotton Advisory Committee’s June estimate of global 2018-19 stocks at 17.37 million metric tons or 79.78 million 480-pound bales. A sizable increase in USDA’s U.S. old-crop export forecast is generally expected to result in lower domestic ending stocks for 2017-18 and beginning stocks for 2018-19. Meanwhile, U.S. crop conditions deteriorated during the week ended Sunday, with good to excellent holding even at 42% but poor to very poor rising five percentage points to 21%, according to the progress report issued by USDA after the close Monday. That compares with 66% good to excellent a year ago and 5% poor to very poor. The DTN cotton crop condition index, based on the USDA report, declined 12 points to 101, down from 167 last year. Planting advanced 14 points to 90% completed, even with a year ago and up from 88% for the five-year average. Fifteen percent was squaring, up from 9% a week earlier, 14% last year and 10% on average. Texas growers planted at an 18-point clip to reach 88% done, up a point from last year and four points ahead of the average. Squaring at 14% was even with last year and up from 10% on average. Crop ratings in Texas showed no excellent, down from 1% a week ago; 25% good, down from 27%; and 31% poor to very poor, up from 23%. A year ago, good to excellent was 62% and poor to very poor was 4%. In ICE cotton futures Monday, July reversed off a new contract high touched in the overnight session to close on a slight loss, while December settled below Friday’s low. The inverted July-December straddle traded between 212 and 340 points and widened 73 points to close at a 307-point July premium on a volume of 14.790 lots. December-March traded between an inverted nine and 25 points and narrowed 10 points to close at a 10-point December premium on 5,778 lots. Cash online trading slowed, with 636 bales changing hands on The Seam’s grower-to-business exchange and 1,450 bales on the business-to-business platform on prices averaging 61.26 and 63.72 cents, respectively. Staple 35 or more accounted for 282 bales or 44% of the grower sales and 1,005 bales or 69% of the business sales. All the sales were from the Southwest. Offerings were 23,549 bales. The Cotlook A Index of world values was unchanged at 101.35 cents, narrowing the premium over the prior-session July futures settlement 122 points to 6.41 cents. In outside markets, Dow Jones Industrial Average futures and S&P futures traded little changed after President Donald Trump and North Korean leader Kim Jong Un signed a joint statement at a historic summit but offered few details on their pledge to denuclearize the Korean peninsula. The Dow inched down 3 points and S&P futures ticked up half a point. July West Texas Intermediate crude oil dipped 7 cents to $66.03 and August Brent crude dropped 34 cents to $76.12. August gold fell $4.10 to $1,294.80. July corn was up 0.82%, July soybeans up 0.45% and July Kansas City wheat up 0.82%. Asian stocks closed mostly higher, up 0.33% in Japan’s Nikkei 225, up 0.13% in Japan’s Nikkei 225, down 0.05% in South Korea’s Kospi and up 0.91% in China’s Shanghai Composite Index. India’s Sensex gained 0.59%. European shares were trading mixed, down 0.23% in Britain’s FTSE 100, up 0.03% in Germany’s DAX and down 0.14% in France’s CAC 40. China’s Zhengzhou’s cotton futures closed mixed and India’s MCX cotton futures were mixed.

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