Doane Cotton Close: 6th Consecutive Day of Losses
The cotton market settled lower Monday, making for 6 consecutive days of losses in the December contract. Both July and December fell to fresh 4 1/2 month lows. Futures declined steadily since early this morning, and with selling setting in hard ahead of the close. July finished 132 points lower at 86.67 cents and December was down 107 points at 84.73 cents.
Rain in the southeast over the weekend and more rain this week across much of the Cotton Belt pressured the market. Forecasts for west Texas were calling for 2 to as much as 4 inches of rain in some areas last week, but those forecasts have since been revised lower. Still, the rain is expected to be spread out over this week, with most of it coming on Tuesday, which should be better for soil absorption rather than losing the rain to runoff.Monday’s Crop Progress report from USDA showed 36% of the crop planted as of May 6, well ahead of last year and the 5-year average of 24% and 28%, respectively. The states that are the furthest ahead of normal are Alabama, Arkansas, Louisiana, Mississippi and Tennessee.
Last week’s export report was mixed for cotton. Upland sales were negative 25,226 running bales due to cancellations from China and Indonesia. Pima sales were positive, however, at 11,032 running bales. Total shipments were a strong 336,373 running bales. Total shipments so far are 8.43 million bales, compared to USDA’s estimate of 11.4 million. Combined with outstanding sales of 3.65 million bales this puts the total at 12.08 million bales. There are typically some bales carried over at the end of the marketing year, but there is still some cushion right now where the cancellations are not a threat to reducing the export estimate.
The ICE Dec and Mar contracts gave back 160 and 87 points on the week, respectively, as last week’s inversion between the two contracts gave way to partial carry. Well,