DTN Cotton Close: Settles Mixed as May Tumbles
Dollar rallied from six-week overnight low. Flooding rains reported in Australia. Rains stalled early Texas planting. Slight rain chance forecast for Lubbock area.
Cotton futures finished mixed Monday, reversing direction in spot May to post a sharp loss after pushing above the prior-session high in overnight dealings.
May closed down 103 points to 77.33 cents, just off the low of its 144-point range from up 38 points at 78.74 to down 106 pints at 77.30 cents. It settled below lows of the prior two sessions at its lowest finish since Tuesday.
July settled down 84 points at 78.54 cents, trading from 79.72 to 78.50 cents. December posted a new contract high at 75.72 cents and closed at 75.67 cents, up four points and from the session low of 75.31 cents. The other contracts settled down a point to up 21 points.
A rally in the U.S. dollar index from down 0.280 at 99.835 overnight to up 0.113 at 100.230 at its high prior to the cotton close may have contributed to the weak close in the old-crop cotton contracts.
Grains gave up earlier gains to finish lower. May corn closed down 1.1%, May soybeans were fractionally lower, May Chicago wheat down 1.4% and May Kansas City wheat off 1.7%.
Cotton volume rose to an estimated 24,478 lots from 16,834 lots the prior session when spreads accounted for 7,947 lots or 47% and EFP 44 lots. Options volume declined to 3,538 lots — (2,148 calls and 1,354 puts) from 11,706 lots (7,439 calls and 4,267 puts).
Reports of flooding rains in some key cotton areas of Australia, a major cotton exporter, may have aided overnight gains along with the slump to an intraday six-week low in U.S. dollar index futures. Heavy rains were reported in areas where cotton is opening.
On the U.S. crop scene, rains of up to 5 inches interrupted planting in the Rio Grande Valley and South Texas early in the reporting week ended Thursday, USDA’s Agricultural Marketing Service said in a cotton review.
About 70% was planted in the valley and 30% around Corpus Christi. Seedlings emerged and some stands were established. Six-true-leaf cotton was noticeable and scouting of plant pests was active. Industry sources expected a 25% increase in planted acres. Subsoil moisture was good ahead of cotton planting in the Blackland Prairies.
Ginning neared the end in Kansas with about 300 bales to be processed and was expected to finish the first week of April in Oklahoma where producers were encouraged by phenomenal yields that exceeded two bales per acre in some dryland fields. Some ginning also continued in the West Texas Plains.
Planting continued around Yuma, Ariz., and seedlings made excellent progress. Gins in Arizona and California continued to send samples of Pima for classing.
Looking ahead, a storm system is expected to bring windy conditions, fire weather and thunderstorms Thursday into Friday in the Texas High and Rolling Plains. Slight rain chances at Lubbock are rated at 20%.
Record to near-record heat is forecast to continue through Tuesday, with highs moderating to the low 70s to near 80 degrees the remainder of the week.
Lubbock registered a record high of 89 degrees on Sunday, topping the old mark of 87 degrees in 1995, and is expected to see 93 degrees Monday, toppling the prior record of 90 degrees in 1916. The high of 92 degrees forecast for Tuesday would be just below the record of 93 degrees in 1997.
Futures open interest expanded 1,933 lots Friday to 281,705, with May’s up 422 lots to 160,294, July’s up 69 lots to 48,669 and December’s up 1,347 lots to 64,672. Cert stocks grew 483 bales to 326,221 bales.
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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.