By admin       2018-06-30

The Dec contract was a weekly loser once again, with the contract giving up 138 points to finish at 83.92. Despite Dec’s loss, the contract failed to take out last week’s low of 82.94. The Dec – Mar spread weakened this week, but remains inverted at 26. The big event this week was, of course, the release of the USDA’s annual June acreage report, which had a moderate effect on ICE cotton futures.In its annual report, the USDA estimated 2018 domestic area committed to cotton at 13.5M acres (13.3M upland). This figure is 7% above 2017 but well below most pre-report expectations.Our own pre-report projection was closer than most at 13.43M acres. Planted area is estimated higher in nearly all states Vs 2017, but 56% of estimated area is within TX, where droughty conditions are already forcing abandonment of both irrigated and non-irrigated fields.Many traders and analysts (including us) will spend a portion of the weekend applying the USDA’s acreage estimates to their S&D balance sheets. On the whole, we think the market is now looking for a significant reduction in the USDA’s domestic production projection (19.5M bales) in the July WASDE report.Cancellations of US old crop commitments continued for the week ending June 21 while new crop sales continue to mount. Total net sales against 2017/18 were approximately 17K running bales while shipments were significant higher, at just short of 390K running bales and well ahead of the pace required to meet the USDA’s 16M bale export projection.Total sales against 2018/19 were significantly lower Vs the previous sales period at around 196K running bales; sales against 2018/19 currently stand at a running total of approximately 5.65M 480lb bales.

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