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Weekly Cotton Comments                 12/02 05:11

   Cotton Closes Higher Despite Weak Export Sales

   March gained 2.35%. Export sales for both crop years came in weak at 29,300 
RB; shipments continued to lag. U.S. crop 84% harvested and 55% classed. Hedge 
funds boosted net shorts as prices plunged. Unpriced mill on-call sales rose 
1,165 lots in March last week. Cotlook sees larger increase in world ending 
stocks. Senate passed railroad bill.

Duane Howell
DTN Contributing Cotton Analyst

   Cotton futures closed higher in the face of ongoing weakness in export 
demand, finishing up 195 points or 2.35% in most-active March for the marketing 
week ended Thursday.

   March settled in the upper quarter of its broad 973-point trading range from 
77.50 on Monday to 87.23 cents on Thursday. It ended up the 400-point daily 
limit on Wednesday, breaking out above short-term resistance at 83.66 cents and 
suggesting to some technicians that Monday's low might mark the end of a 
corrective setback.

   The market is working on an outside-range calendar week to the upside, 
having closed Thursday not only above last Friday's settlement (80.18) but also 
above last week's high (83.66). Nearby resistance is seen at 87.23 and the 
November high at 89.92, with short-term support at 81.26 and 77.50.

   The inverted March-May spread settled unchanged at 70 points, while the 
intercrop July-December inversion narrowed 19 points to close at 312. December 
2023 traded from a low of 84.25 on Monday to a high of 81.63 on Thursday and 
closed at 80.25 cents, up 232 points for the marketing week and its highest 
finish since Sept. 22.

   Volume slowed to an estimated average of 23,016 lots per session from 30,327 
lots the prior week. Coming into Thursday, open interest had gained 2,320 lots 
to 194,776, with maturing December down 586 lots to 117, March up 1,986 lots to 
106,507, May up 1,005 lots to 32,337, July up 398 lots to 28,463 and December 
2023 down 279 lots to 21,885.  Cert stocks were unchanged at 8,901 bales.

   In outside markets, stocks rallied Wednesday after Federal Reserve Chair 
Jerome Powell signaled a potential slowdown in interest rate increases, 
powering the Jones Industrial Average more than 700 points higher and into a 
new bull market, the Wall Street Journal reported. The S&P 500 jumped 3.1%. 
Still, the rally wasn't enough to undo the damage inflicted earlier in the year 
as rapidly rising interest rates battered stocks. The S&P ended down 14% for 
the year and remained on track for its worst year since 2008. It dipped 0.08% 

   Cash online sales jumped to 11,901 bales, largest of the marketing year and 
up from 4,028 bales last week, evidence of the slack grower sales at recent low 
prices. Prices rose 34 points to average 85.24 cents, reflecting a 60-point 
gain to 30.61 cents in premiums over loan values. Grower-to-business sales 
increased to 6,504 bales and business-to-business sales climbed to 5,397 bales.

   On the competitive scene, the five lowest-priced world growths for the Far 
East dropped 158 points to 97.95 cents, while the lowest-priced U.S. growths 
landed there fell 180 points to also 97.95 cents. The U.S. price thus lost its 
22-point premium to move to even. The adjusted world price declined to 74.61 

   The Cotlook A Index coming into Thursday had gained 65 points for the week 
to 99.10 cents, narrowing the international basis by 18 points to 18.49 cents 
over the prior-day March futures settlement.

   On the demand front, net U.S. all-cotton export sales for this season and 
next came in at a mere 29,300 running bales for the holiday-shortened trading 
week ended Nov. 24, though up from net cancellations of 98,900 RB the prior 
week. (China had canceled 116,200 RB of current-crop upland sales the previous 
week when the USDA report was delayed a day and cut its 2022-23 commitments by 
109,500 RB.)

   Upland net sales of 16,500 RB for 2022-23 went to 13 countries, led by India 
(5,700 RB), Indonesia (4,200 RB) and Pakistan (3,500 RB. There were 20,800 RB 
in cancellations, including 14,800 RB to Turkey.

   All-cotton 2022-23 commitments -- outstanding sales of 5.543 million RB plus 
shipments -- inched up to 8.813 million RB, down some 884,000 RB or 9% from a 
year ago. New-crop bookings edged up to 1.145 million RB and were up 220,000 RB 
from forward commitments a year ago.

   Combined upland-Pima shipments slipped to 140,800 RB from 147,000 RB the 
week before, with upland exports of 139,500 headed to 19 countries, headed by 
China (38,300 RB), Pakistan (31,900 RB) and Bangladesh (15,200 RB). All-cotton 
exports for the season totaled 3.269 million RB, about 27% of the USDA forecast.

   To achieve the USDA export projection, all-cotton shipments now need to 
average roughly 253,000 RB per week over the 35 weeks remaining in the 
marketing year.

   On the U.S. crop scene, cotton harvesting advanced five percentage points to 
84% completed during the week ended Sunday, even with a year ago and up five 
points from the five-year average, USDA said in its final weekly 2022-crop 
progress report. The first report for the 2023 crop will be April 3.

   Harvesting moved up six points in Texas to 77% done, down three points from 
a year ago and five points above the average, and rose nine points to 86% 
completed in Georgia, up 11 and seven points, respectively.  Mississippi joined 
Arkansas and Louisiana where harvesting is completed.

   Nearing the finish line were California at 99%; Missouri, 98%; Tennessee, 
95% North Carolina, 94%; and Alabama, Kansas and Virginia, all 91%. States with 
the largest percentages left to harvest were Arizona, 32%; Texas, 23%; and 
South Carolina, 21%. Arizona at 68% picked lagged its average by six points.

   U.S. upland classing of 1.016 million running bales during the week ended 
Nov. 25 brought the season total to 7.264 million RB, up some 93,000 RB or 
about 1.1% from a year ago and about 55% of the RB-converted USDA upland 
production estimate. About 43% of the final upland crop estimate had been 
classed a year ago.

   Tenderable cotton accounted for 84.9% for the week and 83.7% for the season, 
compared with 86.1% and 85.5%, respectively, last year. Color grades 31 or 
better amounted to 78.4% for the season and grades 41 or better totaled 92.7%, 
against 82.4% and 90.7%, respectively, two weeks earlier.

   Classing of 30,228 RB of Pima lifted the extra-long staple count for the 
season to 169,247 and the all-cotton total to 7.435 million RB, up from 7.320 
million RB a year ago.

   On the money-flow front, trend-following hedge funds sold a net 1,542 lots 
to hike their net shorts to 14,919 during the week ended Nov. 22, the latest 
traders-commitments data from the Commodity Futures Trading Commission showed. 
They liquidated 2,057 longs and covered 515 shorts.

   Index funds sold 1,071 lots to cut their net longs to 70,648, while 
non-reportable traders -- mostly small speculators -- sold a net 637 lots to 
shave theirs to 1,651.

   Commercials bought a net 3,251 lots, covering 5,852 shorts and liquidating 
2,601 longs to reduce their net shorts to 57,380. They were net short 22.2% of 
the open interest, down from 23.9%.

   Prices during the reporting week spanned a wide 10.62-cent range, plunging 
from 89.92 cents to 79.30 cents, lowest since Nov. 3. Combined open interest 
declined for the third consecutive week, falling 8,347 lots to a delta-adjusted 

   Separately, unpriced mill on-call sales based in March rose 1,165 lots to 
35,912 last week, CFTC on-call data showed after the close Thursday, while 
unfixed producer purchases increased 3,165 lots to 14,813. The net call 
difference narrowed 2,000 lots to 21,009, 20.02% of the futures OI. The 
unpriced mill sales outweighed the unfixed producer purchases by a ratio of 
2.42:1, not counting any hedges in options.     

   On the international scene, updated 2022-23 world supply-demand projections 
by Cotton Outlook see the surplus of production over consumption widening just 
over a million bales from its forecast a month ago to some 5.57 million. This 
would be up from Cotlook's crop surplus estimate of 1.47 million bales last 

   The new estimates, converted here to 480-poumnd statistical bales from 
metric tons, showed increased production estimates for the United States and 
Turkey have more than offset a reduction for Australia, resulting in a net 
world crop boost of some 240,500 bales to 114.14 million.

   Consumption fell 780,800 bales 108.57 million owing to a downward adjustment 
for India. The ending world carryout projected by Cotlook for this season is up 
4.1 million bales from its estimate of the 2021-22 crop surplus.

   Earlier this month, USDA projected world production to exceed consumption by 
only 1.48 million bales on a crop of 116.43 million and mill use of 114.95 
million. A substantial cut is expected in the world cotton consumption forecast 
in USDA's balance-sheet updates on Dec. 9.

   On policy, the U.S. Senate on Thursday voted overwhelmingly to force 
railroad workers to accept a deal negotiated earlier this fall and rejected a 
House-backed plan that would have given the railroad workers paid sick leave, 
DTN Ag Policy Editor Chris Clayton reported.

   The bill now goes to President Joe Biden.  He had called on Monday for 
Congress to act to avoid a potential railroad strike on Dec. 9. The National 
Cotton Council had joined numerous food and agriculture groups in urging swift 
action on the measure.

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