With March contract options expiration today, the USDA S&D report released early in the morning and the NCC planting intentions to be released in the afternoon, Friday session was the most active and volatile this week. Overnight ICE traded steadily around 20-40 points higher, supported by the firm grains market.
All months traded lower after pit open to form's bottom, then turned direction on wheat's limit up and cotton bullish options. March contract eventually settled just beneath 69 cents. NCC's annual survey of early season planting intentions shows that US producers intend to plant 9.54 million acres of cotton in 2008, down from 10.83 in 2007.
The USDA cotton report is bearish when world ending stocks were increased by 2.6 million stat bales, a 5% change from last month's number. Please see chart on page 2 in attached PDF of this report. US saw a decrease of 0.3 million bales in exports, thus ending stocks.
China's production was increased by 1 million bales, while import was reduced by half million bales and consumption was reduced by 1 million. The noticeable change in the report is that world wheat ending stocks were lowered by 1.2 million metric tons, which supported the wheat market to make another limit up move.
Soybeans and corn also traded significantly higher during the day. With bearish cotton report on one hand and the strong grains market on the other, expectations of the cotton prices are mixed. As we've seen in the past, cotton has been taking the lead from outside commodities market, while fundamentals have not been playing a major role.
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