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 12/17 15:45 Cotton Jumps to Session High on Fed Statement Fed said it can be "patient" about raising short-term interest rates and retained a pledge to keep rates low for a "considerable time." Some Chinese mills said to have complained about quality of domestic cotton. By Duane Howell DTN Cotton Correspondent Cotton futures quickly jumped to a triple-digit gain Wednesday as markets reacted to a Federal Reserve policy statement retaining its pledge to keep interest rates low for a "considerable time." Spot March settled up 87 points to 60.65 cents, in the upper quarter of its 141-point range from down 29 points at 59.49 to up 112 points at 60.90 cents. It rallied from a five-session low to close even its settlement on Monday. May settled up 78 points to 61.16 cents, July rose 80 points to 61.87 cents and new-crop December advanced 92 points to 64.43 cents. The widely awaited Fed statement, released late in the cotton session, said it would be patient about raising short-term interest rates in the coming year as it weighs a mix of conflicting signals about the economy. Volume dipped to an estimated 14,000 lots from 15,487 lots the previous session when spreads accounted for 2,265 lots or 15%, EFP 855 lots and EFS 40 lots. Options volume totaled 1,379 calls and 2,485 puts. Reports have circulated this week that a number of Chinese spinners have said quality of domestic cotton has been insufficient for high-count yarn production because of a lack of strength. The fiber strength of Xinjiang cotton is reported running around 28 grams per tex (GPT), with mechanically picked cotton averaging around 27.5 GPT. Some mills are said to have indicated that they might have to turn to imports with the full 40% import tariff if they cannot find domestic cotton with the necessary specifications. Classing data reported by USDA showed an average strength of 30.1 GPT in the U.S. 2014-15 crop graded through Dec. 4, according to figures compiled by the National Cotton Council. This was up from the five-year average of 29.8 GPT. Strength averaged 29.0 GPT in the Southeast, 30.8 in the Mid-South, 30.3 in the Southwest and 31.3 in the West. Nationally, the data showed cotton grading 41 (strict low middling) or better totaled 91.7%, with averages of 35.7 for staple, 45.5 for micronaire and 81.2 for uniformity. Meanwhile, the USDA report due Thursday on U.S. export sales for the week ended Dec. 11 is expected to show a modest slowdown as the updated supply-demand estimates loomed on Dec. 10. Upland sales for the week ended Dec. 4 were 199,200 running bales, up 19% from the prior week. Futures open interest increased 1,035 lots to 173,902 on Tuesday, with March's up 665 lots to 120,923 and May's up 80 lots to 29,938. Cert stocks declined 2,197 bales. There were three newly certified bales, 2,200 bales decertified and 3,278 bales awaiting review. World values as measured by the Cotlook A Index dropped 45 points Wednesday morning to 68.35 cents. The premium to Tuesday's March futures settlement widened 42 points to 8.57 cents. (RQ) Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
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