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Weekly Cotton Comments                 08/19 05:34

   Cotton Gains 7.75% On Stunning Crop Forecast

   Export commits at 61% of small crop. U.S. acres for harvest forecast at 
smallest in 150-plus years; record abandonment estimated at 43%. Texas harvest 
acres smallest since 1879. Global stocks expected to tighten. U.S. crop 
improved. Wet period seen for Texas Plains. Hedge funds hiked net longs 
slightly. Unpriced mill December-July call sales fell 668 lots.

Duane Howell
DTN Contributing Cotton Analyst

   Slashed U.S. crop prospects sent cotton futures rocketing higher during the 
marketing week ended Thursday, powering benchmark December to some daily limit 
gains before back-to-back losses trimmed the advance to 811 points or 7.75% to 
settle at 112.70 cents.

   December closed in the upper half of its wide 1,686-point range from 102.73 
cents last Friday to 119.59 cents on Tuesday. It posted six higher closes in a 
row and recaptured well over half the 5,125-point plunge from the contract high 
of 133.79 cents on May 17 to the 82.54-cent contract low for the year on July 

   The inverted December-March spread narrowed a tick to settle at 294, while 
the March-May inversion widened 110 points to 287. The inverted July 
2023-December 2023 intercrop straddle widened 434 points to 1,489.

   Volume jumped to an estimated average of 78,076 lots per session, bolstered 
by a massive 189,459 lots on Tuesday. The prior-week average was 24,993 lots. 
Open interest grew 9,426 lots to 197,504, with December up 1,147 lots to 
107,088, March up 3,585 lots to 40,504, May up 242 lots to 16,234, July up 
1,197 lots to 11,752 and December 2023 up 2,105 lots to 19,308. Cert stocks 
were unchanged at 4,552 bales.

   Online cash sales rose to 3,316 bales from 949 on The Seam. Prices leaped 
1,881 points to an average of 118.91 cents per pound, reflecting gains of 1,702 
points to 64.42 cents over loan values. Grower-to-business sales were 3,200 
bales and business-to-business sales were 116 bales.

   On the competitive scene, the average of the five lowest-priced world 
growths for the Far East surged 1,375 points to 126.,82 cents, while the 
lowest-priced U.S. growth landed there jumped 1,415 points to 128.10 cents. The 
U.S. premium thus widened 40 points to 1.28 cents. The adjusted world price 
rose to 101.90 cents.

   World values as measured by the Cotlook A Index coming into Thursday had 
soared 1,770 points from a week earlier to 134.90 cents, narrowing the 
international basis eight points to 18.05 cents over the prior-day December 
futures settlement.

   On the demand scene, with 2022-23 export commitments already at a large 
percentage of the crop estimate, net U.S. all-cotton export sales for this 
season and next came in at only 60,400 running bales for the week ended Aug. 
11, down 252,100 RB from comparable year-ago sales.

   Net current-crop sales of 49,500 RB for the first full week of the new 
marketing year were down 203,200 RB from a year ago. There were 51,600 RB in 
2022-23 cancellations for this season.

   All-cotton 2022-23 commitments, including rollovers of unshipped 2021-22 
shipments, totaled 7.467 million RB, up 2.124 million RB or about 40% from a 
year ago. Commitments stand at 38% of the latest export estimate and already 
amount to about 61% of the small crop projected in USDA's August supply-demand 

   Commitments for 2023-24, all upland cotton, totaled 720,900 RB, up from 
forward bookings a year ago of 575,600 RB.

   All-cotton shipments of 269,100 RB went to 20 countries and brought the 
total for the season to 455,100 RB, up from 423,100 RB a year ago.  Exports 
averaging roughly 224,000 RB per week would match the USDA export estimate.

   Earlier, USDA stunned the market with a supply-demand update that U.S. 
all-cotton production prospects have plunged 2.53 million bales from a month 
ago to 12.57 million, the smallest crop in 13 years. This is down from a final 
2021-22 estimate of 17.52 million bales.

   Drought in the Southwest, the largest cotton region, is expected to reduce 
the harvested area dramatically to 7.13 million acres, the smallest in more 
than 150 years. Abandonment is estimated at a record 43%.  Yields are forecast 
at 846 pounds per harvested acre, up from 819 pounds last season and slightly 
above the three-year average.

   With relatively low beginning stocks, the smallest cotton supply since 
1984-85 is projected to limit exports to 12 million bales, 2 million below the 
July projection.

   Final 2021-22 exports were estimated at 14.65 million bales, slightly below 
the July estimate and the lowest since the 2015-16 shipments of 9.15 million 
bales. Complete data for 2021-22 exports will be available in September, 
reflecting the cumulative shipments reported weekly by USDA along with data 
reported by the Census Bureau.

   Domestic mill use is projected at 2.3 million bales in 2022-23, 10% below 
the year before. Despite the lower export estimate, the United States is 
expected to remain the world's largest cotton exporter, accounting for a 27% 
share of global trade, down from 34% the year before.

   With U.S. cotton demand forecast to exceed production, ending stocks are 
expected to decline to 1.8 million bales, about half the beginning level and 
the lowest in nearly a century. Similarly, the stocks-to-use ratio is projected 
at its lowest since 1924-25 at 12.6%.

   Upland production in Texas is estimated at 2.9 million bales, below the 3.5 
million produced in the record dry year of 2011 and the lowest since 2.87 
million bales in 1989. Yields are projected at 633 pounds per harvested acre, 
down from 666 pounds last year and the five-year average of 703 pounds. Acres 
for harvest at 2.2 million would be down from 5.55 million last year and the 
smallest since 1879 (2.175 million).

   Globally, mill use is projected at 119.09 million bales, exceeding 
production for the third consecutive year. Down marginally from a month ago, 
consumption is expected to remain at a relatively high level, resulting in the 
world stocks-to-use ratio dipping slightly to 69.5%, lowest since 2018-19.

   World production is projected at 117.01 million bales, 1% higher than the 
previous year as a result of a larger harvested area. The record high U.S. 
abandonment limited the global production increase. The top four producers -- 
India, China, Brazil and the United States -- are expected to contribute 69% of 
the world crop.

   Global cotton trade is forecast to expand some 5% from last season to 44.6 
million bales, with gains for Brazil and Australia more than offsetting 
declines for the United States and India. China and Bangladesh continue as the 
leading cotton importers.

   Back on the U.S. crop scene, USDA ratings showed good-to-excellent cotton up 
a slight three percentage points for the week ended Sunday, with fair up three 
points to 34% and poor to very poor up a point to 35%.  Last year, G/E was 67%, 
fair 28% and P/VP 5%.

   Boll setting advanced 11 points to 80%, up seven points from last year and 
two points above the five-year average; boll opening increased six points to 
15%, up six points and down a point, respectively.

   In Texas, G/E remained at 14%, with excellent at 1% up from zero; fair down 
two points at 36%; and P/VP up two points at 50%. Last year, G/E was 64%, fair 
21% and P/VP 5%. Boll setting at 76% and boll opening at 21% were both up 10 
points from last year and three points above average.  The G/E is up two points 
from the comparable period in 2011.

   Harvesting and ginning continued to expand in the Texas Rio Grande Valley 
and Coastal Bend. Picking was quickly wrapping up. Gins processed accumulated 
modules. Harvesting also progressed rapidly in the Upper Coast as producers 
rushed to get cotton off the stalk ahead of weekend thunderstorms. Defoliation 
advanced quickly in the Blackland Prairies.

   Classing of 73,116 bales at Corpus Christi during the marketing week brought 
the total for the season to 114,710, 96.4% of which were of tenderable quality. 
Twenty-five gins submitted samples for classing.  Corpus classed an additional 
67,470 bales during the next five days to lift the season total to 182,180.

   Hit-and-miss, moderate to heavy thunderstorms -- some locations got up to 
2.5 inches of rainfall -- developed on the Texas Plains.  Some fields in the 
northern High Plains had standing water between the rows.  The rains benefitted 
cotton that was blooming and at or near peak water use but came too late for 
cotton that had reached cutout.

   Looking forward, weather forecasters see some heavy rainfall events ahead 
for cotton areas of the Southwest. A 40% chance for showers and thunderstorms 
was seen for the Lubbock area Thursday night, increasing to 60% Friday and 70% 
Saturday and Sunday. Chances then are expected to linger for days. Lubbock got 
1.41 inches of rainfall Thursday and 2 inches fell at nearby Idalou.

   On the money-flow front, hedge funds lifted their net longs a slight 414 
lots to 7,487 during the week ended Aug. 9, the first increase in 14 weeks, 
according to the Commodity Futures Trading Commission.

   They added 914 longs and 500 shorts prior to USDA's supply-demand report.  
Non-reportable traders -- mostly small specs -- bought 1,064 lots to push their 
net longs to 2,719 lots.  That increase was nearly identical to that for index 
traders, whose net longs rose 1,066 lots to 73,347.

   Commercials sold a net 2,545 lots, liquidating 2,944 longs and covering 399 
shorts to boost their net shorts to 83,563, 31.2% of the OI. December prices 
for the reporting week ranged from 93.70 to 99.34 cents.  Combined OI increased 
2,413 lots to a delta-adjusted 267,638.

   Meanwhile, unpriced mill sales in the December 2022 through July 2023 
contracts declined 688 lots to 87,490 last week, CFTC data showed. Unfixed 
producer purchases dipped 72 lots to 62,398. The net call difference fell a 
modest 596 lots to 62,398, 36.5% of the rising OI. Unpriced mill sales 
outweighed unfixed producer purchases by an essentially unchanged ratio of 

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