Quiet cotton market
Thursday Trading Activity – The nearby lead month opened lower but hit its daily high within the first 90 mins of trade only to find a low by 4:00 AM EDT that proved to be within 11 pts of its 7 cent limit. By the last hour of trade, July had climbed above unchanged only to settle down 137 pts. Follow-through selling from the previous limit down close accounted for the general weakness as did the lack of confidence on the part of buyers while specs continued exiting longs and/or adding to shorts. Similar to old crop, the December made its highs by 10:00 PM EDT but then lost nearly 400 pts over the next 6 hours. By the last hour, December tried but failed to take out its earlier highs but unlike July, closed up 198 pts higher. Estimated futures volume per the exchange is 24,991, much better than the past few days. Cert stocks rose slightly to 206,112 with 56,663 under review for a possible total of 263K. May open interest remains extremely high at 5,358 contracts or 535,800 bales. There are no deliveries this evening leaving the total since last Thurs’ FND at 13 contracts.
US Exports – This week’s data is very similar to that of recent weeks with a negative 39K in sales as cancellations by China and Morocco exceeded new sales made by Vietnam. Shipments totaled 361K bales of upland and pima cotton headed to China, Turkey, Vietnam, Mexico, Indonesia, Brazil and Bangladesh. Commitments after 38 weeks are 15.24 mln running bales nearly the same as the USDA estimate of 15.29 mln running bales (15.75 mln statistical). As for new crop, sales were a modest 68K bales with Thailand and South Korea the two largest purchasers. With the start of the 2011/12 crop year just over 3 months away, combined sales are an impressive 5.41 mln running bales or 37% of the USDA Outlook Projection of 14.56 mln running bales (15.00 mln statistical).
US Competiveness/World Trade Prices – The weekly A indexes for old crop were down 32.52 cts with Cotlook to 182.85 and the USDA calculation off 32.49 cts at 180.07, the lowest for both since Jan 20. Cotlook made substantial changes to the prices of various growths from countries within the Afr Fr Zone as well as introducing the Brazilian quote, both of which led to a historic one-week drop. Brazil’s low quote allowed it to command the nbr 1 spot with a weekly average of 171.66. The succession of fighting in the Ivory Coast led to its re-introduction at nbr 2 at 172.25. Since Cotlook only allows two Afr Fr Zone quotes within its top 5, either Mali or Burkina get to take over the 3 spot at 184.83, down nearly 36 cents. Despite the shuttling of growths and prices, MOT and Memphis held onto nbrs 4 and 5 at their average values of 187.67 and 190.17, also down just over 25 cents. The last two remaining growths not in the A index are Australia and Uzbekistan at 191.25 and 203.67 respectively, a loss of 15.90 and 21.83 cts each. The AWP took its largest one week fall dropping to 163.23 down 32.49 cts. The 39 week average of the Cotlook A index is 163.57.