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Bumper week for US cotton trade helps revival in futures

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Happy times for US cotton merchants.


US export sales of the upland cotton enjoyed another strong performance in the week to February 1, soaring 33% from the previous week’s high figure to reach 402,400 running bales.


That is the second highest total of 2017-18, during which total commitments (ie sales still on the books plus fulfilled orders) have reached 12.1m running bales so far.


That is equivalent to 88% of the total the US Department of Agriculture expects for the full season – at only the half-way stage.


Sales vs shipments


That might make it look a sure fire bet that the US Department of Agriculture, in its Wasde crop report later on Thursday, will lift the forecast for full-year US cotton sales.


After all, commitments are 22% ahead of those last season - yet the USDA is expecting a small drop in US exports in 2017-18, of 0.8%.


The problem has been the level of actual shipments, which has fallen well short of the pace required to meet the export target.


At 4.78m running bales, they are running 8.6% behind the pace of a year ago.


Still, at least in the latest week, at a 10-month high of 432,463 running bales, shipments played a bit of catch-up, running well ahead of the near-350,000 running bales which was needed to hit the current USDA target.


Investors were upbeat, anyway, taking New York cotton futures for March to 77.04 cents a pound after the sale data, a 1.4% rise on the day.


Bean bounce


Corn export sales in the latest week were also decent, at 1.77m tonnes – down some 80,000 tonnes week on week, but 27% above the previous four-week average, and at the top end of the range of market estimates.


Soybean export sales recovered well from the marketing-year low set the previous week, near-trebling to 743,223 tonnes, a little above the range of market forecasts.


Actual exports jumped to 1.54m tonnes, including 808,700 headed to China, whose trade is being closely watched given talk that Beijing is mulling an anti-dumping investigation into imports of US soybeans.


Hard red harder to sell?


Wheat export sales, at 393,437 tonnes, came comfortably within market expectations of 200,000-400,000 tonnes, helped by a farm better week for orders for white winter wheat, which recovered to 135,435 tonnes, from net cancellations of 47,208 tonnes the week before.


If there was a disappointment, it was over sales of hard red winter wheat, which tumbled 44% week on week to 121,275 tonnes.


As Tregg Cronin at Halo Commodity Company noted on Wednesday, US export prices of hard red winter wheat with 12.5% protein, at $224-225 a tonne, are well above the $209 a tonne being charged for German wheat with the same protein level, and the $198 a tonne for Russian supplies.


“It could be an ugly report,” he had said, referring to the export sales data.


EU a net importer


Data on European Union soft wheat exports were definitely on the unslightly side, coming in at 157,000 tonnes for actual shipments this week, taking the total so far in 2017-18 to 12.598m tonnes - down 18% year on year.


The latest figure was particularly poor, coming in well below the average weekly pace of shipments of some 400,000 tonnes so far during the season.


It even below the import figure of 164,000 tonnes, making the EU unusually, and one would think temporarily, a net wheat importer.


Overall EU soft wheat imports this season (which started in July), at 2.189m tonnes, are running 9% higher year on year.


Corn imports, at 6.60m tonnes, including 365,000 tonnes this week, are up by 54%.

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