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Weekly Cotton Comments                 04/09 05:11

   Cotton Jumps to Highest Price Since March 25

   Traders jockeyed for position ahead of supply-demand data; export sales 
rebounded. Cotlook boosted the margins by which world mill use is expected to 
exceed global production in 2020-21 and 2021-22. Analysts expect modest changes 
in USDA's monthly supply-demand estimates. Unpriced on-call mill sales fell 
2,146 lots in the May and July deliveries.

Duane Howell
DTN Contributing Cotton Analyst

   Cotton futures surged above highs of the prior eight sessions for the 
marketing week ended Thursday, led by spot May on a gain of 346 points or 4.44% 
to settle at 81.41 cents.

   May closed above highs of the previous three sessions in the upper quarter 
of the week's 429-point range from 77.65 cents on Monday to 81.94 cents on 
Thursday, its highest intraday print since March 25. Monday's low was the 
lowest since the March 26 low at 77.12, which was the lowest since Dec. 29 and 
now is regarded as an important support area.

   The May-July switch traded out to near full carry at 137 points and narrowed 
seven ticks for the week to settle at 125. The inverted old-crop, new-crop 
July-December straddle widened 18 points for the week to a settlement 
difference of 154 points.

   Traders jockeyed for position ahead of USDA's monthly supply-demand report 
to be released later Friday. A rebound in weekly export sales for a reporting 
week in which spot futures sank to a three-month low contributed to the gains, 
as perhaps did a jump to a new high close in December corn.

   Volume increased to an average of 45,006 lots per session from 37,570 lots 
the prior marketing week. Open interest coming into Thursday had 2,153 lots to 
230,799, with May's down 13,387 lots to 73,090, July's up 8,486 lots to 63,620 
and December's up 4,620 lots to 75,029. Certificated stocks were unchanged at 
95,537 bales.

   Cash online cotton sales dwindled to 6,252 bales on The Seam, including 
4,404 bales on the grower-to-business exchange and 1,848 bales on the 
business-to-business platform. Prices fell 980 points to average 66.60 cents 
per pound, reflecting a 4.68-point decline to 22.29 cents in premiums over loan 
values. Offerings late Wednesday were 52,350 bales.

   On the competitive scene, the five lowest-priced world growths for the Far 
East fell 67 points to 84.17 cents, while the lowest-priced U.S. growth landed 
there fell 148 points to 86.92 cents. The U.S. premium thus narrowed 81 points 
to 2.75 cents. The adjusted world price declined to 64.92 cents, 12.92 cents 
over the base U.S. loan rate. The fine count adjustment for 2020-crop cotton 
declined 21 points to 33.

   Net U.S. all-cotton export sales for this season and next rose to 326,200 
running bales during the week ended April 1 from 124,100 RB the previous week 
and 104,000 RB a year ago, USDA weekly data showed. Sales were 277,400 RB for 
2020-21, up from 82,700 RB the prior week and net cancellations of 3,400 RB a 
year ago, and 49,000 RB for 2021-22, up from 41,400 RB but down from 107,400 
RB, respectively.

   Upland current-crop net sales of 269,900 RB, up from 78,400 RB the week 
before and 8% above the four-week average, reflected gross sales of 278,800 RB 
and cancellations of 8,900 RB. Sales went to 16 countries, led by Vietnam, 
Pakistan, China, Turkey and South Korea. Cancellations were mainly for Hong 
Kong and Malaysia.

   The margin by which 2020-21 commitments of 15.594 million RB -- outstanding 
sales of 5.237 million plus shipments -- trailed year-ago cumulative sales 
narrowed to 235,0000 RB. Commitments were about 104% of the USDA export 
estimate, compared with about 105% of final shipments at the corresponding 
point last season.

   New-crop sales brought 2021-22 commitments 1.593 million RB, widening the 
gap below year-ago forward bookings to 556,000 RB. The fresh sales went 
primarily to China and Indonesia, each with 13,800 RB; Turkey, 11,800 RB; 
Pakistan, 5,700 RB; and Mexico, 2,600 RB.

   All-cotton shipments climbed to 393,300 RB from 339,000 RB the prior week 
but were down from 520,000 RB a year ago. Upland shipments of 371,700 RB, up 
15% from the previous week and 11% from the four-week average, went to 25 
countries, headed by Vietnam, Pakistan, Turkey, China and Mexico.

   Shipments for the season reached 10.357 million RB, narrowing the lead over 
year-ago exports to 881,000 RB or to about 9%. Shipments were 69% of the March 
export estimate, against 63% of final exports a year ago.  Exports averaging 
roughly 275,200 RB per week would match the estimate.

   Meanwhile, salient features of Cotton Outlook's latest monthly estimates of 
world cotton production and consumption are increases in mill use for both the 
2020-21 and 2021-22 marketing years.

   As textile supply chains have recovered following the most acute phase of 
the pandemic-related disruption, many spinners have enjoyed good profits and 
some have been adding new capacity, according to Cotlook.

   While adjustments on the supply side have been more modest, Cotlook raised 
its estimates of mill use by 1.43 million 480-pound bales or 1.3% from its 
previous forecast to 114.15 million for 2020-21 and by 551,500 or 0.8% to 
118.14 million for 2021-22. The estimates are converted here from metric tons 
to statistical bales.

   Cotlook cut its estimate of world production by 340,400 bales or 0.3% to 
110.41 million for 2020-21 and nudged its forecast for 2021-22 up 160,800 bales 
to 115.95 million.

   The revisions resulted in significant Cotton Outlook increases in the 
margins by which world stocks are forecast to fall. World production is 
projected by Cotlook 3.74 million bales below consumption for 2020-21, still 
400,000 bales below USDA's March projection, and 2.19 million bales below mill 
use for 2021-22.

   The USDA will issue its first detailed world estimates for 2021-22 on May 
12. A tightening U.S. balance sheet is expected by Cotlook to result in 2021-22 
beginning stocks falling below 4 million bales. This would be a major reduction 
from USDA's March estimate of the beginning 2020-21 inventory (2019-20 ending 
stocks) of 7.25 million.

   Ahead of updated USDA 2020-21 supply-demand estimates later Friday, analysts 
estimated U.S. cotton production at an average of 14.67 million bales, down 
30,000 bales or 0.2% from USDA's forecast last month of 14.7 million. Analysts' 
estimates ranged from 14.55 million to 14.8 million bales.

   Typically, USDA doesn't change its cotton output estimate in April ahead of 
its final crop year revisions in May on yields, acreage and production.

   Analysts estimated U.S. exports at 15.8 million bales, up from 15.5 million 
forecast by USDA last month, and projected ending stocks of 4.11 million bales, 
down from USDA's 4.2 million. World ending stocks are expected to slip 160,000 
bales to 94.43 million.

   On-call data reported by the Commodity Futures Trading Commission after the 
close Thursday showed unpriced mill sales fell 2,146 lots to 38,428 in the 
old-crop May and July contracts during the week ended April 1. The unpriced 
sales were 27.8% of the open interest, down from 28.3%.

   Producers shaved their unfixed position by 407 lots to 8,270. The net call 
difference dropped 1,799 lots to 30,158, easing down to 27.8% of the open 
interest from 28.3%. 

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