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 08/29 15:19 Cotton Rallies Late to Close Flat in December Classing of 103,277 bales at Corpus Christi this week boosted the season's total to 281,298 bales, up from 82,756 bales a year ago. Tenderable cotton totaled 81.8% for the week and 78.5% for the season. By Duane Howell DTN Cotton Correspondent Cotton futures rallied to the day's high in benchmark December in the late going and finished about flat Friday ahead of a long holiday weekend. December settled off a tick at 66.57 cents, just off the high of its 90-point range from down 82 points at 65.76 to up eight points at 66.66 cents. It gained 39 points for the week and 370 points or 5.9% for the month. Nearby October closed up 46 points to 67.60 cents and March slipped 17 points to settle at 67.01 cents. The market will be closed Monday in observance of Labor Day. Volume slipped to an estimated 18,300 lots from a final 19,210 lots the previous session when spreads accounted for 6,739 lots or 35% and EFP 603 lots. Options volume totaled 2,671 calls and 918 puts. Classing increased to 103,277 bales during the week ended Thursday from 84,601 bales the previous week at the USDA facility at Corpus Christi. The office has graded 281,298 bales for the season, up from 82,756 bales a year ago. Cotton tenderable on futures contracts climbed to 81.8% for the week and 78.5% for the season, compared with 80.1% and 76.4% the prior week, respectively, and 43.1% and 51.6% a year ago. Cotton harvesting neared completion in the South Texas district and the Rio Grande Valley. Stalks were shredded or plowed under. The stalk destruction deadline in the valley is Sept. 1. This is regarded as vital to disrupt the life cycle of boll weevils and prevent overwintering. Defoliants were applied and some fields harvested in the Blackland Prairies. The Corpus Christi office received the first classing samples from that area. Meanwhile, unfixed on-call positions based in December increased by 115 lots to 11,560 on the mill side last week and declined by 391 lots to 21,445 on the producer side, according to the latest call data from the Commodity Futures Trading Commission. The net call difference narrowed 506 lots to 9,885, which was 8.9% of the December open interest, against 9.09% a week earlier. The ratio by which the unfixed position of producers outweighed that of mills eased to 1.86:1 from 1.91:1. In the March, May and July 2015 contracts, mills added 792 lots to raise their unpriced call holdings there to 29,986 lots and producers added 103 lots to nudge their unfixed position to 3,034 lots. Separately, exemplifying depleted old-crop inventories, outstanding U.S. 2013-14 upland loans declined 9,497 running bales during the week ended Monday to only 48,267 bales. Old-crop cotton under loan included 3,672 bales of Form A issued to individual growers and 44,495 bales of Form G issued to loan servicing agents, USDA figures showed. Upland loans outstanding on new-crop cotton rose by 6,609 bales to 14,238 bales. Entries totaled 13,806 bales and repayments were made on 7,197 bales. Futures open interest dipped 169 lots Thursday to 175,408, with December's down 1,250 lots to 111,571 and March's up 777 lots to 48,239. Cert stocks declined 161 bales to 71,071. World values as measured by the Cotlook A Index fell 75 points Friday morning to 75.30 cents, widening the premium to Thursday's December futures settlement by 13 points to 8.72 cents (RQ) Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
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