DTN Closing Cotton Commentary 05/21 15:55

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DTN Closing Cotton Commentary 05/21 15:55

DTN Closing Cotton Commentary          05/21 15:55

   Cotton Finishes Sharply Lower 

   Spot July settled 29 points under December.  China's April imports fell 15% 
from a year ago.
 

By Duane Howell
DTN Cotton Correspondent

   Cotton futures fell to sharp losses and closed just off the lows Tuesday as 
spot July finished under December's settlement. 

   July lost 192 points to settle at 83.86 cents, a tick below its May 1 finish 
and beyond that its lowest settlement since April 25.  It settled four points 
off the low of its 193-point range from down three points at 85.75 to down 196 
points at 83.82 cents. 

   December shed 145 points to close at 84.15 cents, nine points off the low of 
its 153-point range from down a point at 85.59 to down 154 points at 84.06 
cents. 

   July had been steadily losing its premium to December, with crop concerns 
contributing to new-crop support and heavy cert stocks -- though the stocks 
dipped Tuesday -- weighing on the old-crop delivery.

    Volume quickened to an estimated 29,710 lots from 17,489 lots the previous 
session when spreads totaled 6,003 lots or 34%, EFP 147 lots and EFS 8 lots.  
Options volume totaled 8,721 calls and 3,955 puts. 

   China's April cotton imports fell 15% from a year earlier to 430,867 metric 
tons (1.98 million 480-pound bales), Dow Jones Newswires reported, quoting the 
General Administration of Customs.  January-April imports fell 13.5% to 1.8 
million tons (8.27 million bales). 

   The USDA in its supply-demand estimates earlier this month raised its 
estimate of China's imports by 1.75 million bales from its April forecast to 
18.25 million for the 2012-13 marketing year ending July 31. 

   China's 2013-14 imports are forecast at 12 million bales, down 34% from 
2012-13, as growing official reserve stocks -- in defense of producer minimum 
support price -- create less need for foreign cotton. 

   In forecasting China's 2013-14 imports, USDA took into consideration current 
reserve release prices and import quota policies.  The 2013-14 projection puts 
China's share of global imports at 40%, down 14 percentage points from 2012-13. 

   Imports are forecast to increase in Bangladesh, Pakistan, Mexico and Turkey 
but not by enough to offset the sharp decrease in China.  Also, India's imports 
are projected to fall 30% to a million bales. 

   World 2013-14 cotton trade is forecast to decline 12% from 2012-13 owing to 
a combination of lower exportable supplies and China's policy-driven lower 
demand for foreign cotton. 

   This would represent the third consecutive annual decline in global trade 
amid sharply lower exports foreseen for such major exporters as Australia, 
Brazil, India and the United States. 

   Futures open interest expanded 2,191 lots Monday to 188,764, with July's up 
829 lots to 123,813 and December's up 1,197 lots to 61,008. 

   Certificated stocks declined 3,585 bales to 506,710.  There were 264 newly 
certified bales, 3,849 bales decertified and 3,094 bales awaiting review. 

   World values as measured by the Cotlook A Index dropped 50 points Tuesday 
morning to 93.40 cents.  The premium to Monday's July futures settlement 
widened 13 points to 7.62 cents. 


(RQ)

Copyright 2013 DTN/The Progressive Farmer. All rights reserved.

Posted: 5/21/2013 16:30pm

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