Cotton Rebound with Triple-Digit Gains
A light wintry mix of snow and rain fell on Plains. Brazil cut cotton tariff and increased wheat import quota. Cash business sales slowed to 1,393 bales on The Seam and grower sales rose to 842 bales.By Duane Howell DTN Cotton Correspondent
Cotton futures posted triple-digit gains Wednesday, rebounding from four consecutive closing losses in a row in front of USDA’s updated supply-demand report later in the day.
Most-active May hovered up 140 points to 86.04 cents at 8:25 a.m. CDT, trading within a 173-point range from the opening low overnight at an unchanged 84.64 cents to 86.37 cents on a contract volume of 5,663 lots.
July gained 144 points to 88.05 cents on a turnover of 3,899 lots and December rose 147 points to 87.26 cents on a volume of 412 lots.
The USDA will release its updated U.S. and world supply-demand estimates at 11 a.m. CDT. Global production last month was projected down 3% from the previous year and consumption up 4%.
Despite rising mill use, USDA in March forecast world ending stocks up 18% from a year earlier to a record high, driven largely by China’s purchase policy, which sent China’s stocks surging 46% to 54% of the global carryout. Perceptions of tightening stocks outside China were credited with playing a major role in an 18% first-quarter futures jump.
On the weather scene, a light wintry mixture of snow and rain fell early Wednesday in the Lubbock area of the Texas High Plains. Warm, dry and windy conditions earlier this week — high temperatures had reached around 90 degrees — had continued to deplete soil moisture.
In the news, Brazil’s government said it cut the tariff on imported cotton and doubled the quota of wheat that can be imported with no tariff, both for limited time periods, Dow Jones reported.
Up to 80,000 tons (367,400 480-pound bales) can be imported from May 1 through July 31 without paying a 10% tariff, the trade ministry said. The goal is to ensure supplies for Brazil’s textile industry before the cotton harvest starts in June, the ministry said.
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