Source: CAI

November 10 2014 (Source: Agfax.com)

Cotton futures skidded from triple-digit gains to steep losses on huge volume Monday as earlier buying linked partly to exercised options lost momentum on the heels of supply-demand estimates viewed initially as slightly bearish.

December lost 153 points to close at 62.43 cents, near the low of its broad 349-point range from up 181 points at 65.77 to down 168 points at 62.28 cents. It finished at its lowest close since Oct. 20. March closed down 129 points to 61.32 cents, its lowest finish since Oct. 2 after trading within a 263-point range from up 109 points at 63.70 to down 154 points at 61.07 cents.

December 2015 dropped 50 points to 65.81 cents. Volume jumped to an estimated 77,800 lots from 44,935 lots the previous session when spreads totaled 30,992 or 69%, EFS 748 lots and EFP 22 lots. Options volume totaled 3,426 calls and 2,494 puts.

U.S. crop prospects improved 142,000 bales — a slight decline on average had been expected — from the October forecast to 16.397 million. Increases in the Southeast and the Southwest more than offset a reduction in the Delta, USDA said.

The estimate was at the top end of expectations. Domestic mill use and exports were unchanged at 3.8 million and 10 million bales, respectively, resulting in an increase to 5.1 million bales in ending stocks from 4.9 million foreseen in October. The stocks-to-use ratio rose to 37% from 35.5% last month.

The USDA projected the marketing year average farm price to range between 56 and 64 cents, with the midpoint remaining unchanged at 60 cents, down from 77.90 cents last season.

The upland crop accounted for the production increase, rising to 15.819 million bales while the output of Pima remained at 578,000 bales.

By regions, upland production increased 85,000 bales to 5.145 million in the Southeast and 92,000 bales to 6.707 million in the Southwest, led by a 150,000-bale hike in the Texas output to 6.4 million bales.

Upland prospects fell 45,000 bales to 3.205 million in the Delta and increased 10,000 bales to 762,000 in the Far West.

All-cotton yields nationally were estimated at an average of 797 pounds per harvested acre, compared with 790 pounds forecast in October, 821 pounds last season and the five-year average of 819 pounds.

Globally, only minor revisions left ending stocks up 250,000 bales or 0.24% to 107.36 million. Beginning stocks were raised 170,000 bales to 101.48 million, production gained 240,000 bales to 119.69 million and consumption grew 170,000 bales to 113.85 million.

With the carryover estimate for China unchanged on the month at 62.16 million bales, ending stocks in the rest of the world were projected at 45.2 million bales, up from 38.77 million a year earlier.

The world production hike reflected increases for Burma, the African Franc Zone and the United States, mostly offset by reductions for China, Australia and Uzbekistan.

World consumption rose marginally on increases for Burma, mostly offset by a 500,000-bale cut to 37.5 million for China. Estimates for Burma’s supply-demand were revised beginning in 2000-01 based on a review of data sources for production and trade, USDA said.

Futures open interest declined 5,159 lots Friday to 185,782, with December’s down 9,869 lots to 65,223 and March’s up 3,874 lots to 86,690. Cert stocks grew 667 bales to 17,212.

World values as measured by the Cotlook A Index gained 35 points Monday morning to 69.55 cents. Premiums to Friday’s futures settlements narrowed 42 points to 5.59 cents over December and widened two points to 6.94 cents over March. (Source: Agfax.com)