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DTN Cotton Open: Ticks Mostly Lower on Inside Old-Crop Action

Ernst Undesser
By Duane Howell DTN Cotton Correspondent April 21, 2017

DTN Cotton Open: Ticks Mostly Lower on Inside Old-Crop Action

Maturing May was unchanged following the prior day’s explosive surge. Cash online sales rose to 6,669 bales on The Seam, with growers selling 6,008 bales on prices averaging 79.92 cents.

Cotton futures traded flat to slightly lower Friday on inside old-crop price action following the previous day’s explosive surge to nearly a three-year spot high in maturing May.

May hovered at 80.07 cents, trading within a 91-point range from 80.30 to 79.39 cents on a contract volume of 915 lots on this last trading day before first notice day. Its open interest coming into the overnight session was down 5,089 lots to 6,030 lots.

July ticked down 20 points to 78.91 cents on a turnover of 4,118 lots, trading within a 60-point range from 79.35 to 78.75 on a turnover of 4,118 lots. December was down six points to 74.81 cents on 1,436 lots, confined to a mere 29-point range from 74.95 to 74.66 on 1,436 lots.

In outside markets, U.S. dollar index futures reached a three-session high and traded up 0.150 to 99.835, while Dow Jones futures and S&P futures inched up 2 points and 1.75 points, respectively.

June crude oil traded up two cents to $50.73, Brent crude ticked down a cent to $50.26 and June gold eked up 60 cents to $1,284.40. May corn was down 0.1%, May soybeans up 0.4%, May Chicago wheat down 0.6% and July Kansas City wheat down 0.2%.

Earlier, Asian stocks were mostly higher, up 1.02% in Japan’s Nikkei 225, down 0.06% in Hong Kong’s Hang Seng, up 0.74% in South Korea’s Kospi and up 0.03% in China’s Shanghai Composite Index. European shares were mixed, up 0.37% in Germany’s DAX and down 0.12% in France’s CAC 40. Britain’s FTSE 100 edged up 0.10%.

China’s Zhengzhou cotton futures settled higher and prices ended with mostly gains on the China National Cotton Exchange. India’s MCX cotton futures were firm and local prices firmed further.

In ICE cotton futures Thursday, May exploded to a new contract high and inverted over July in what some interpreted as an indication that a potential stopper or stoppers may want any May deliveries.

The May-July switch traded from 75 points July/over to 99 points May/over and flipped 161 points to settle at a 96-point May premium on a volume of 4,687 lots. Inverted July-December traded from 383 to 447 points and widened 39 points to close at a 383-point July premium on 3,167 lots. The December-March inversion widened 14 points to settle at a 31-point December premium on 516 lots.

In cash online trading, grower-to-business and business-to-business sales increased to 6,669 bales from 3,753 bales on The Seam. Prices rose to an average of 79.54 cents from 75.32 cents. Premiums over loan repayment rates rose to an average of 25.87 cents from 23.15 cents. Offerings were 10,070 bales.

Growers sold 6,008 bales, up from 940 bales, on prices averaging 79.92 cents, up from 75.49 cents. The basis on the base quality gained 100 points to 150 points off July futures in the Delta.

The Cotlook A Index of world values was unchanged at 87.80 cents, narrowing the premium over the prior-day July futures settlement 16 points to 9.48 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent April 21, 2017