Cotton futures appreciate 0.6% as grains, corn remain weak on nervy expectations

Cotton futures made an appreciable start Thursday adding 0.6 percent to 83.39 cents a pound in New York, with grains remained weak, amid nervy expectations ahead of a slew of data.

Indeed, cotton futures for May added 0.6 percent to 83.39 cents a pound in New York Thursday morning with the new crop December lot up 0.2 percent at 78.24 cents a pound.

Corn futures, on the other hand, dropped by 0.2 percent to $3.86 ½ a bushel.

Weekly export sales data for the grain are also expected to come in strong, at 1.0m-1.5m tonnes, although below the 1.75m tonnes the previous week.

Corn was, unusually for the last week, outperformed by wheat, standing at 0.1% at $4.97 ½ a bushel for May in Chicago, with Kansas City hard red winter wheat futures for May easing a modest 0.1% to $5.34 a bushel.

But this is after heavier profit taking than in corn already this week and comes against a backdrop of expectations for continued dryness in the drought-hit US southern Plains, a key hard red winter wheat growing region.

Investors expect much of this barrage of statistics due later to be bullish in aspect.

For the US Department of Agriculture’s Wasde crop report, they are forecasting a downgrade of 500,000 bales to 5.50m bales in the forecast for US cotton inventories at the close of 2017-18, according to a Reuters’ poll.

The expectation reflects ideas of an upgrade to US export hopes. For global inventories, the expectation is for a downgrade of 1.05m bales to 87.5m tonnes.

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“Analyst surveys suggest the market is expecting the USDA to forecast materially tighter cotton supplies,” said Tobin Gorey at Commonwealth Bank of Australia.

And that is not the only upbeat data expected on Thursday.

The USDA will also release its weekly Drought Monitor, which will remind of the dryness in the southern Plains, where more than half the country’s cotton is grown.

And there is weekly data on US exports too, which will be assessed, as has been the habit of late, more for the statistics on actual shipments than on sales (which are already within an ace of the 14.5m bales the USDA forecasts for 2017-18, which does not end until July).

“The USDA wants to see cotton actually being shipped,” said Ron Lee at Georgia-based McCleskey Cotton, adding, “I believe that number will start to pick up. If our warehouse is a microcosm of the situation, I know that it will. As recently as 3-4 weeks ago, our warehouses had a pick-up rate of 25-30 percent. Last week, 87 percent of scheduled shipments were picked up and so far this week, every load has been picked up on time.”