DTN Cotton Open: Ticks Slightly Higher in Tight-Range Action
December posts new contract high. Record heat persists on Texas Plains. Trend-following funds shaved net longs 1,213 lots from the prior-week record high. Cash online sales declined to 4,982 bales on The Seam.
Cotton futures ticked slightly higher in narrow-range early dealings Monday, with spot May striving for a rare five higher closes in a row.
May hovered up 16 points to 78.52 cents, trading within a 41-point range from 78.33 to 78.74 on a volume of 1,935 lots. It opened on the low overnight and touched the high around 3:30 a.m. CDT. July ticked up 14 points to 79.52 cents on 812 lots and December edged up four points to 75.67 cents on 815 lots. December posted a new contract high at 75.70.
Hot, windy weekend weather gripped areas of the Southwest, the nation’s top cotton-producing region, and more is just ahead. The thermometer is expected to hit 93 degrees Monday at Lubbock on the Texas High Plains, topping the record of 90 degrees set in 1916. This follows the hottest February ever recorded at Lubbock.
In outside markets, U.S. dollar index futures traded marginally ahead, up 0.030 to 100.145, after falling overnight to a new intraday low since early February. Dow Jones futures ticked down 14 points and S&P futures down 4.25 points.
Crude oil lost 82 cents to $47.96, Brent crude shed 66 cents to $51.10 and April gold gained $1.60 to $1,231.80. May corn was up 0.5%, May soybeans up 0.4%, May Chicago wheat up 0.6% and May Kansas City wheat up 0.1%.
Earlier, Asian stock markets mostly were mixed, up 0.8% in Hong Kong’s Hang Seng and 0.4% in China’s Shanghai Composite Index but down 0.4% in South Korea’s Kospi and India’s Sensex. Japan’s markets were closed for a holiday. In early trading in Europe, Germany’s DAX dipped 0.2% and France’s CAC 40 dropped 0.3%. Britain’s FTSE 100 dipped 0.2%.
China’s Zhengzhou cotton futures lost ground and prices ended with modest gains on the China National Cotton Exchange. India’s MCX cotton futures were firm.
Meanwhile, trend-following funds shaved their net longs from a record high by 1,213 lots to 113,369 during the week ended Tuesday, liquidating 927 longs and adding 286 shorts, according to figures reported by the Commodity Futures Trading Commission after the close Friday.
May futures during the reporting week lost 88 points on a closing basis. Index funds trimmed their net longs 189 lots to 69,807, while traders with non-reportable positions reduced theirs 433 lots to 7,167.
Commercials bought a net 1,834 lots, covering 2,342 shorts and liquidating 508 longs to pare their net shorts to 190,343 lots. Combined open interest edged up 480 lots to 319,216.
In futures alone, non-commercials sold a net 1,464 lots to drop their net longs from a record high to 125,203 lots. They liquidated 1,907 longs and covered 443 shorts. Their net longs fell 0.7 of a percentage point to 45.6% of the open interest, which rose by 1,349 lots to 274,706.
In futures Friday, May settled with a modest gain and up 107 points for the week after having slipped on Tuesday below the prior-week low.
The May-July spread traded from 92 to 104 points carry and widened seven points to close at a 102-point July premium on a volume of 2,381 lots. The inverted July-December straddle widened nine points to close at a 375-point July premium, trading from 368 to 410 points on 1,598 lots. December-March’s inversion narrowed eight points to a 15-point December settlement premium on 183 lots.
In cash online trading, overall sales declined to 4,982 bales from 5,966 bales on The Seam. Prices fell to a gross average of 72.15 cents from 74.30 cents, reflecting a gain to 21.56 cents from 20.43 cents in gross average premiums over loan repayment rates.
The Cotlook A Index of world values gained five points to 87.45 cents, narrowing the premium over the prior-day May futures settlement four points to 9.28 cents.
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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.