Prospective U.S. plantings below expectations powered cotton futures to daily limit gains and lifted the most-liquid new-crop contract to within striking distance of its lifetime high last week.
Prices still settled mixed for the week ended Thursday, with spot May down 859 points to 200.23 cents for the period despite a gain for the day of 656 points. Index funds have begun rolling forward their longs in May.
New-crop December gained 469 points to 132.50 cents for the week after closing up the 700-point daily limit. It finished just 89 points shy of its high settlement and 326 points from its intraday contract high.
Cotton futures jumped 55.42 cents or 38.3 percent for the quarter. This marked the ninth consecutive quarter of gains. Cotton topped gains in the Reuters-Jefferies CRB index, which rose 8 percent for the quarter to the highest level since September 2008.
The market surged after USDA reported all-cotton planting intentions of 12.566 million acres, up 1.593 million acres or 15 percent from 2010.
Prospective plantings are the largest since 2006 when growers seeded 15.27 million acres but are below an average increase of around 20 percent expected by analysts and traders.
High prices of competing grains and soybeans, a lack of cotton equipment and infrastructure in some regions after producers had switched to other crops, and rising production costs are among the factors said to have affected farmer intentions.
Some plantings estimates had ballooned as high as 14 million acres after old-crop futures surged early this month to an all-time high of 227 cents, though most had ranged from 12.8 million to 13.5 million acres.
Higher cotton prices since then had indicated the market was calling for more acres and had fueled expectations for additional plantings. However, competing crop prices also have remained strong.
Abandonment at a seven-year average of 10.8 percent would leave 11.02 million acres for harvest. And an average yield of 810 pounds per acre as projected by USDA at its Outlook Forum in February would mean a crop of 18.91 million bales.
This would compare with an estimated 18.32 million bales this season, 12.82 million bales in 2008-09 and 19.21 million bales in 2007-08. However, crop prospects are heavily clouded by dry soils in Texas, which at 6.115 million acres of all cotton is expected to plant about 49 percent of the U.S. acreage. Dry springs in the West Texas Plains typically are associated with heavy abandonment. Many crop analysts are skeptical of production forecasts at this point.
The acreage report overshadowed weekly export sales totaling a net 279,000 running bales for this season and next. Net cancellations and buy-backs of 38,900 bales were reported for 2010-11 but old-crop commitments remained at 101 percent of the USDA forecast.
New-crop export sales were impressive at 317,900 running bales, boosting 2011-12 commitments to 4.836 million bales. Forward sales already are about 33 percent the Outlook Forum estimate in running bales for the crop year beginning Aug. 1.
Shipments of 467,700 bales hiked exports for the season to 9.216 million, 60 percent of the USDA estimate. The pace is second only to 2005-06 when a record 17.14 million running bales were exported, an analyst said.
In international news, China’s top economic planning body announced details of its internal state reserves purchasing program, a mechanism aimed at stabilizing domestic output and assuring market supply.
The government beginning this fall will purchase cotton at 19,800 yuan ($3,018) per metric ton in 13 major producing regions if the local average price falls below that for five consecutive working days, the National Development and Reform Commission said.
The China Cotton Index dipped about 1.4 percent for the week to the equivalent of 207.42 cents per pound. China is both the world’s largest cotton producer and largest cotton importer.
Back on the U.S. scene, gins processed the equivalent of 18,099,950 statistical bales from the 2010 crop, down 214,550 bales from USDA’s last monthly estimate, according to end-of-season ginning data.
The ginning data is expected to be reflected in the April supply-demand report and incorporated into the final 2010 crop figures in May, when small new revisions often are made. Ginning totaled 17,596,650 statistical bales of upland and 503,300 bales of Pima. Texas gins turned out 7,920,200 bales, down 129,800 bales from the last estimate.