July finished at its lowest close since March 5. Mills priced a modest 168 on-call lots of old-crop cotton and added 840 lots in December in the latest CFTC reporting week.
Cotton futures extended a losing streak to six sessions in a row Friday, finishing at the lowest close in spot July since March 5.
July settled down 54 points to 89.82 cents, just off the low of its 108-point range from up 48 points at 90.84 to down 60 points at 89.76 cents. It slipped through longstanding chart support around 90 cents to near another support point at 89.71, the low of March 24.
December closed off 28 points to 82.34 cents, trading from up 18 points at 82.80 to down 44 points at 82.18. It posted its lowest intraday price since April 25 and lowest close since April 21.
For the week, the market shed 254 points in July and 137 points in December. The inverted July-December spread lost 117 points, closing at a 748-point premium on July. The close matched the low seasonal settlement on Tuesday when it traded down to 708 points, lowest since January.
Volume slowed to an estimated 12,200 lots from 16,312 lots the previous session when spreads totaled 4,199 lots or 26% and EFP 42 lots. Options volume totaled 2,085 calls and 4,070 puts.
Mills priced a modest 168 on-call lots of old-crop cotton during the week ended last Friday to trim their unfixed July position to 30,345 lots, according to the latest Commodity Futures Trading Commission call report.
Producers priced 543 lots to shave their small unfixed position to 1,456 lots. The net call difference widened 375 lots to 28,889 (2.889 million bales), which was 24.07% of July’s declining open interest, against 23.48% a week earlier.
The unfixed mill position in July outweighed that of producers by a ratio of 20.84:1, up from 15.26:1 the prior week. Mill fixations are expected to quicken ahead of first notice day for July deliveries on June 24. Scale-down mill pricing this week may have slowed the July descent.
Producers priced 789 lots in December during a reporting week in which the new-crop contract posted two new seasonal intraday highs, reaching up to 84.74 cents on May 8. This reduced their unfixed December position to 18,401 lots.
Mills added 840 December lots to hike their unfixed position there to 12,872 lots. The net call difference held by producers narrowed by 1,629 lots to 5,529, which totaled 8.32% of December’s rising open interest, down from 11.77%.
Meanwhile, repayments reduced U.S. outstanding loans on upland cotton by 123,242 running bales during the week ended May 12, according to the latest USDA figures.
Upland loans outstanding declined to 898,866 bales, including 65,211 bales of Form A issued to individual growers and 833,655 bales of Form G issued to marketing cooperatives or loan servicing agents.
Futures open interest declined 1,420 lots Thursday to 191,108, with July’s down 1,930 lots to 114,395 and December’s up 330 lots to 68,321. Certificated stocks grew 4,031 bales to 405,712. There were 5,196 newly certified bales, 1,165 bales decertified and 4,963 bales awaiting review.
World values as measured by the Cotlook A Index dropped 15 points Friday morning to 92.55 cents. The premium to Thursday’s July futures settlement widened 19 points to 2.19 cents.
Forward A Index values for 2014-15 slipped 25 points to 90.05 cents, widening the discount to the 2013-14 index by 10 points to 2.50 cents and the premium to Thursday’s December futures close by a point to 7.43 cents.
For the week, the index for 2013-14 lost 175 points and the new-crop index fell 65 points.
DTN Closing Cotton Commentary 10/29 14:48 Cotton Jumps to Five-Week High Close Index fund rolling set to begin Thursday. Fed says it will end its bond-buying by the end of October. Light freeze reported in northwestern areas of the Texas Plains. Larger weekly export sales expected. By Duane Howell DTN Cotton Correspondent Cotton futures jumped to a five-week-plus intraday high in spot December and settled in the upper half of the day's range Wednesday. December closed up 88 points to 65.35 cents, trading from down 30 points at 64.17 to up 152 points at 65.99 cents. It took out resistance at Friday's high of 64.66 cents and posted its highest intraday price and highest close since Sept. 17. March settled up 38 points to 63.22 cents, just above the midpoint of its 127-point range from 62.55 to 63.82 cents, and December 2015 gained 21 points to close at 66.39 cents. Index fund rolling of longs from December is scheduled to begin Thursday and continue for a couple of weeks. The Rogers fund will be first, followed by the Deutsche Bank and then the Goldman Sachs rolls. Volume leaped to an estimated 34,400 lots from 17,254 lots the previous session when spreads accounted for 7,654 lots or 44%, EFS 71 lots and EFP 33 lots. Options volume totaled 3,680 calls and 3,817 puts. In the news, the Federal Reserve said it would stop its long-running bond purchase program at the end of October, ending a historic experiment that has stirred intense debate about its effects in markets even though the central bank said it accomplished its main goal of reducing unemployment, Dow Jones Newswires reported. At the same time, the Fed upgraded its assessment of the job market's performance while pointing to some short-term downside risks on inflation. It stuck to an assurance that short-term interest rates will remain near zero for a "considerable time." Taken together, the moves were viewed as a vote of confidence by the Fed in the U.S. economy. The announcement came late in the cotton session, leaving little time for any fiber market reaction. On the crop scene, a light freeze and frost in northwestern areas of the Texas High Plains, second of the fall for some, are expected to further facilitate plant dry-down and help expedite stripper harvesting. Olton in Lamb County and Muleshoe in Bailey County recorded lows of 31 degrees on readings by the National Weather Bureau's cooperative site and Texas Tech's West Texas Mesonet, respectively. Average first freeze dates are Oct. 23 at Olton, Oct. 22 at Muleshoe, Oct. 31 at Lubbock and Nov. 4 at Lamesa in Dawson County on the south. Lubbock hasn't yet experienced its first fall freeze and none is in sight. The earliest and latest first freeze dates for Lubbock are Oct. 7, 1952, and Nov. 23, 2003. Forecasts are for warm, mostly sunny to partly sunny skies through Sunday, with a slight chance for showers and thunderstorms returning on Monday and Tuesday. Temperatures are expected to range mostly from the low 40s to high 50s for nighttime lows and low 60s to middle 70s for daytime highs. The normal date range is 44-71 degrees. Around 20% of Lubbock County cotton has been defoliated and harvesting is increasing, reports indicated. Temperatures earlier this week reached as high as 91 degrees at Lubbock, promoting maturity in some late-planted cotton. Meanwhile, expectations appear to be mostly for an increase in U.S. upland export sales for the week ended Oct. 23 from 78,800 running bales the prior week. The USDA will issue the report at 7:30 a.m. CDT Thursday. Futures open interest expanded 1,478 lots Tuesday to 195,959, with December's up 727 lots to 95,871 and March's up 458 lots to 72,331. Cert stocks again were unchanged at 15,928 bales. World values as measured by the Cotlook A Index gained 30 points Wednesday morning to 70.30 cents. Premiums to Tuesday's futures settlements narrowed 50 points to 5.83 cents over December and 35 points to 7.46 cents over March. (RQ) Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
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