DTN Cotton Close: Settles Lower for 3rd Session
All-cotton export commitments stand at 86% of the USDA estimate and up 60% from a year ago. U.S. Far East premium narrowed.
Cotton futures traded within narrow ranges and closed lower for the third day in a row in old-crop deliveries Thursday.
Most-active May closed down 51 points at 76.76 cents, a tick off the low of its 68-point range from up 16 points at 77.44 to down 52 points at 76.76 cents. It settled below lows of the prior three sessions.
March, where first notice day arrives Wednesday after a market holiday on Monday, finished down 70 points to 75.01 cents. July closed down 70 points to 77.60 cents and December settled down 24 points to 74.33 cents. December had touched its new contract high of 74.60 cents set Wednesday.
The market slipped in the face of weaker U.S. dollar index futures, which fell to a five-session low and traded down 0.710 to 100.455 shortly after the cotton close. The Dow Jones industrials and the S&P 500 were slightly lower.
Volume increased to an estimated 53,380 lots from 40,826 lots the previous session when spreads accounted for 26,894 lots or 66%, EFS 574 lots and EFP 128 lots. Options volume totaled 3,302 lots — 1,615 calls and 1,687 puts.
Net U.S. all-cotton export sales for shipment this season of 234,900 running bales during the week ended last Thursday, up from 212,100 RB the previous week, boosted 2016-17 commitments to 10.638 million RB.
The lead over year-ago commitments narrowed 84,000 RB to 3.989 million or 60%. Commitments — outstanding sales of 4.742 million RB plus shipments — were 86% of the USDA export estimate. A year ago, cumulative sales stood at 75% of final 2015-16 exports.
All-cotton shipments of 363,300 RB, down from the marketing year high of 464,000 RB the previous week, brought exports for the season to 5.896 million RB. Shipments widened the lead over year-ago exports 173,000 RB to 2.434 million or 70%.
Shipments were 47% of the USDA projection, compared with 39% of final 2015-16 exports at the corresponding point last season. To achieve the estimate, shipments need to average roughly 190,700 RB a week for the remaining 24 weeks in the marketing year. Sales averaging roughly 70,000 weekly would match the export estimate.
Sales for shipment next season jumped to 123,300 RB to bring the total for both marketing years to 358,200 RB, up 27,200 RB from combined sales the week before. Commitments for 2017-18 rose to 871,000 RB, tightening the gap behind forward sales a year ago to 29,700 RB.
On the competitive-pricing front, the average of the five lowest-priced world growths for the Far East rose 74 points to 84.62 cents in the week ended Thursday, according to USDA calculations, while the average of the lowest-priced U.S. cotton landed there gained 50 points to 85 cents.
The U.S. premium thus narrowed 24 points to 0.38 cent. Back in mid-December, the premium was 2.35 cents. For the program week ahead, the adjusted world price — reflecting transportation and quality differentials — is figured at 67.19 cents for a zero marketing loan gain. The fine count adjustment for 2016-crop qualities better than 31-3-35 is 19 points.
Futures open interest declined 3,192 lots Wednesday to 278,866, with March’s down 7,995 lots to 33,845 and May’s up 3,481 lots to 150,797. Certified stocks continued to grow, rising 7,942 bales to 300,234. Awaiting review were 6,261 bales — 2,569 bales at Galveston and 3,692 bales at Houston.
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The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.