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Weekly Cotton Comments                 09/17 05:17

   Cotton Finishes Lowest Since Sept. 1

   Weekly export sales rose to 294,400 RB. U.S. crop pegged at 18.5 million 
bales, third largest on record; Texas second largest ever at 8.6 million bales. 
World carryout seen lowest in three years. U.S. crop rated 64% G/E; boll 
opening at 36% and 5% harvested. Corpus classing still below last year. Hedge 
funds bought 4,578 lots; index funds net sold 2,129 lots. Unpriced mill sales 
climbed to record high.

Duane Howell
DTN Contributing Cotton Analyst

   Cotton futures continued to trade in a choppy, sideways manner on mostly 
light volume, with benchmark December dropping 71 points or 0.8% to settle at 
92.51 cents for the marketing week ended Thursday.

   December remained within the trading range established in the week's opening 
session last Friday between 92.01, lowest since Aug. 24, and 94.11 cents, 
finishing in the lower quarter of the 210-point span. It settled on its lowest 
close since Sept. 1, still above the uptrend channel off the March lows coming 
into the session at 92.27.

   The inverted December-March spread narrowed 10 ticks to settle at 71 points, 
while the also inverted March-May widened six ticks to close at 31. December 
2022 closed down a single point at 82.26 cents.

   Traders focused initially on USDA's monthly supply-demand estimates showing 
U.S. production prospects some 800,000 bales above the pre-report trade 
consensus of about 17.7 million bales and on another hike to the second highest 
world mill use on record. Then they digested weekly export sales that were 
about as expected and shipments, though higher, that remained below the pace 
needed to make the new estimate.

   Volume slowed to an estimated average of 22,024 lots from 24,607 lots last 
week. Open interest dipped 505 lots to 273,386. Cert stocks declined 940 bales 
to 63,515.

   Cash online sales increased to 8,765 bales on The Seam from 3,586 bales. 
Prices gained 52 points to average 92.21 cents per pound, reflecting a 71-point 
drop to 37.74 cents in average premiums over loan values. Grower-to-business 
sales were 1,557 bales and 7,208 bales changed hands on the 
business-to-business exchange.

   Net U.S. all-cotton 2021-22 export sales came in at 294,400 running bales 
for the week ended Sept. 9, USDA reported, down from 465,100 RB the prior week 
and 547,600 RB a year ago. Upland sales of 284,800 RB, down 37% from the prior 
week but up 9% from the prior four-week average, went to 17 countries, again 
headed by China with 183,900 RB. Cancellations were a negligible 800 RB.

   Commitments of upland and Pima combined -- outstanding sales of 5.268 
million RB plus shipments -- reached 6.482 million RB, 1.418 million RB below 
year-ago cumulative sales. No new sales were reported for 2022-21, leaving 
forward bookings at 686.800 RB, up from 400,200 a year ago.

   All-cotton shipments quickened to 240,600 RB, up from 167,300 RB the week 
before and 204,900 RB a year ago. Upland shipments of 237,500 RB, up 53% from 
the prior week and 27% from the four-week average, went to 21 countries, led by 
China with 86,600 RB. Shipments need to average roughly 300,500 RB per week to 
make the USDA estimate.

   U.S. all-cotton production is projected at 18.51 million bales, up 1.25 
million bales from the August forecast despite a 4% decline in acres for 
harvest, largely because of a projected huge jump in the Texas crop. This would 
be the third largest U.S. crop of the last decade.

   Upland production is forecast at 18.174 million bales, up 4.1 million bales 
or 29% from 2020-21 and above the five-year average of 17.5 million bales. 
During the past 20 years, the September upland crop forecast was above the 
final estimate 11 times and below it nine times. Past differences between the 
September and final estimates indicate a two out of three chance for the 2021 
crop to range between 16.8 million and 19.5 million bales, USDA says.

   Ginning of the late-developing upland crop as of Sept. 1 totaled 199,750 
running bales, down from 287,760 ginned a year ago, 359,250 in 2019 and 489,100 
in 2018.  

   Pima or extra-long staple production is forecast at only 335,000 bales, down 
10% from the previous forecast and down 39% from 2020. The ELS crop, grown 
primarily in the West, is down 547,000 bales last season and the lowest since 
1988.

   The only increase in upland production from last month among the four 
regions was in the Southwest, thanks largely to a 1.5-million-bale jump to 8.6 
million in Texas. This would be the second largest ever in the Lone Star state, 
behind only 9.27 million bales in 2017. The upland planted and harvested area 
in California and Louisiana are estimated at the lowest on record.

   The Texas upland output, 88% higher than in 2020, is expected to be achieved 
on a yield of 786 pounds per acre, up from 686 pounds last year. Acres for 
harvest, at 5.25 million, are estimated up 64% from last year's 3.2 million.    

   By regions, the upland crop is forecast at 4.285 million bales in the 
Southeast, down 83,000 from August, with Georgia down 100,000 bales to 2.2 
million; 3.86 million in the Mid-South, down 120,000 bales, with Arkansas up 
170,000 bales to 1.15 million and Mississippi down 100,000 bales to 1.03 
million in Mississippi; 1.545 million in the Southwest, with Oklahoma up 90,000 
bales to 740,000; and down 61,000 bales to 464,000 in the West, lowest upland 
output there in more than 80 years.

   Despite the lowest planted area in five years, favorable growing conditions 
in the Southwest reduced the region's abandonment expectations to 17%, compared 
with last season's 49% and the five-year average of 29%, and the yield is 
forecast at 796 pounds per harvested acre, the third highest on record.

   All-cotton plantings were reduced 4.5% from a month ago to 11.2 million 
acres based on acreage reported to the Farm Service Agency. The harvested area 
is forecast at 9.9 million acres, 4% below the August forecast. As a result, 
abandonment is forecast at 11.35%, compared with about 31.5% in 2020. The 
national yield is forecast at 895 pounds, second highest behind only 905 pounds 
in 2017-18.

   Other U.S. 2021-22 estimates compared with a month ago and a year ago, 
respectively, included beginning stocks at 2.5 million, down 50,000 bales and 
down 4.1 million; domestic use at 2.5 million, unchanged and up 150,000 bales; 
exports at 15.5 million, up 500,000 and down 870,000 bales; and ending stocks 
at 3.7 million, up 700,000 and up 550,000 bales.

   While lower world trade is expected to limit U.S. exports this season, the 
U.S. share of global trade is projected only slightly below 2020-21 at 33%. And 
U.S. mill use is forecast at the highest in three years. The stocks-to-use 
ratio is projected to rise to 20.6% from 16.8% in 2020-21, but strong global 
demand has continued to support prices.

   The 2021-22 upland cotton farm price is projected at 84 cents per pound, up 
from an estimated 66.5 cents in 2020-21 and the highest since 2011-12. The 
final 2020-21 upland farm price estimate will be released at the at the end of 
September.

   Globally, ending stocks are projected at the lowest in three years at 86.68 
million bales, down 550,000 from a month ago and down 4.62 million or 5% from 
2020-21. The decrease from last season is largely attributable to a 
4.3-million-bale decline in China. With world mill use forecast to exceed 
production for the second year in a row, the highest world cotton prices in a 
decade are expected, USDA says.

   World cotton production is projected at 119.59 million bales, up 750,000 
from a month ago and 7.2 million bales above the year before. Global cotton 
mill use is forecast at 124.14 million bales, up 810,000 bales from a month 
ago, up 4.5 million bales from 2020-21 and just below the record high of 124.21 
million in 2006-07. The 2021-22 world crop shortfall thus is forecast at 4.55 
million bales, compared with 4.49 million foreseen last month and 7.25 million 
now estimated for 2020-21.

   Global cotton trade is projected to remain at one of its highest levels on 
record, though down from last year, in support of world mill use. World exports 
are forecast at 46.76 million bales, about 4% below last season.

   On the U.S. crop scene, cotton rated good to excellent improved three 
percentage points to 64% during the week ended Sunday and poor to very poor 
dropped a point to only 6%, USDA reported, up 19 points and down 20 points, 
respectively, from a year ago.

   Boll setting at 96% was three points below last year and the five-year 
average, while boll opening at 36% lagged by 10 points and seven points, 
respectively. Five percent was harvested, down a point from last year and three 
points below the five-year average.

   The big Texas crop improved four points to 58% G/E and P/VP fell three 
points to 6%, compared with 30% and 42%, respectively, a year ago. Eleven 
percent was harvested, down from 13% last year and 14% for the five-year 
average.

   Many producers in southern Texas rushed the cotton harvest, working into the 
night, ahead of the approach of Hurricane Nicholas and to complete stalk 
destruction by then extended deadline last Friday.

   Nicholas made landfall early Tuesday as a Category 1 hurricane, slowed to a 
crawl and brought heavy rains to parts of Texas, the Delta and the Southeast, 
arriving two weeks after Hurricane Ida slammed Louisiana. The market didn't 
seem much concerned about damage to the crop.

   More gins began operating in the Upper Coast and modules began to accumulate 
on gin yards. Boll openers and defoliants were applied in some areas of the 
Blacklands. Stripper harvesting was expected to begin in about two weeks.

   Classing of 100,547 running bales at Corpus Christi during the marketing 
week ended Sept. 9 brought the season's total to 280,479, down from 455,249 
graded through the corresponding period last season.  Tenderable cotton 
accounted for 88.2%, down from 93.6% a year ago. Classing of an additional 
79,774 bales during the next five days brought the season's total to 360,253.

   Hot, sunny conditions with daytime highs in the low to upper 90s prevailed 
in the Texas Plains, helping to push maturity. Bolls had begun to open on the 
lower portion of plants. Some fields were irrigated to alleviate plant stress. 
Stray thunderstorms brought light rainfall to some areas, mostly in the 
Northern High Plains and the Rolling Plains.

   On the money flow front, hedge funds bought 4,578 lots in cotton 
futures-options combined during the week ended Sept. 7, adding 3,930 longs and 
covering 648 shorts to boost their net longs to 87,223, while index funds sold 
2,129 lots to lower theirs to 86,481.

   The latest traders-commitments data reported by the Commodity Futures 
Trading Commission also showed non-reportable traders -- mostly small 
speculators -- bought 843 lots to lift their net longs to 11,521.

   Commercials sold a net 3,293 lots, adding 4,252 shorts and 959 longs to 
raise their net shorts to 185,225, 55.7% of the combined open interest. Those 
are their largest net shorts in these reports since June 2018.

   Prices during the reporting week ranged from 92.08 to 94.60 cents, basis 
December. Combined open interest rose by 6,677 lots to a delta-adjusted 
332,370, largest since early November 2018.

   Meanwhile, mills bought a net total of 1,118 lots on-call last week to raise 
their unpriced call sales to a record high 156,646 lots, edging above the 
previous mark of 156,505 lots set in early August 2018, according to CFTC data 
reported after the close Thursday.

   The unpriced mill sales were 57.4% of the futures open interest Producers 
priced a net total of 213 lots, trimming their unfixed position to 41,957 lots. 
The net call difference increased 1,331 lots to 114,689, which was 42.01% of 
the open interest.

   By comparison, unpriced mill sales a year ago were 98,480 lots, 45.3% of the 
open interest, and the net call difference was 50,036 lots, 23% of the OI.   




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