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DTN Cotton Close: Slips to 5-Session Low in July

Ernst Undesser
By Duane Howell DTN Cotton Correspondent May 18, 2017

DTN Cotton Close: Slips to 5-Session Low in July

©Debra L Ferguson Stock Images

Plunge in Brazil currency drew cotton attention. Patchy blowing dust expected at Lubbock. U.S. 2016-17 export commitments reached 14.258 million RB, up 5.768 million RB from a year ago.

Cotton futures closed down nine to 93 points across the board Thursday, with spot July losing the most and finishing at a five-session low settlement.

July lost 93 points to settle at 79.24 cents, in the lower quarter of its 179-point range from up 46 points at 80.63 to down 133 points at 78.84 cents. It has shed 6.08 cents the last three days after advancing 8.83 cents on a closing basis the prior three sessions.

December dropped 82 points to close at 73.64 cents, near the low of its 92-point range from 74.47 to 73.55 cents. It finished below lows of the previous two sessions.

A sharply deepening political crisis in Brazil slammed the real currency, hammered soybeans and may have weighed on cotton on the potential for stiffened export competition from the Brazilian fiber crop.

On the weather front, patchy, blowing dust was expected in the Lubbock area of the Texas High Plains Thursday afternoon. A red flag warning for critical fire conditions was issued for the southwestern area because of strong winds, low relative humidity and warm temperatures. A high of 90 degrees was forecast at Lubbock. Persistent winds are taking a toll on topsoil moisture and drying some seedbeds.

Volume slowed to an estimated 28,008 lots from 37,519 lots the prior session when spreads accounted for 15,916 lots or 42%, EFP eight lots and EFS eight lots. Options volume declined to 16,285 lots (7,291 calls and 8,994 puts) from 21,906 lots (5,740 calls and 16,166 puts).

Net U.S. all-cotton export sales during the week ended last Thursday of 127,200 running bales for shipment this season, down from 163,900 RB the previous week, brought 2016-17 commitments to 14.258 million RB, USDA’s weekly report showed.

The lead over year-ago commitments narrowed 74,000 RB to 5.768 million RB or 68% and were 101% of the USDA export forecast. A year ago, commitments were 96% of final shipments.

Upland sales of 120,700 RB, which went to 15 countries and were within the range of general expectations, included gross sales of 182,300 RB and increased cancellations 61,600 RB.

All-cotton sales for next season of 170,500 RB, up from 159,900 RB the prior week, boosted 2017-18 commitments to 2.675 million RB. The lead over forward sales a year ago widened 116,000 RB to 1.435 million and were 20% of the USDA export projection, compared with year-ago bookings of 9% of the current 2016-17 shipments estimate.

Shipments of upland and Pima combined remained strong at 399,300 RB, though down from 428,400 RB the previous week. Upland shipments of 388,000 RB, up 9% from the four-week average, went to 26 countries.

Exports for the season rose to 11.075 million RB, 4.61 million RB or 71% ahead of shipments a year ago. Shipments were 79% of the USDA estimate, compared with 73% of final exports at the corresponding point last year.

To achieve the export projection, shipments now need to average roughly 271,800 RB over the 11 weeks remaining in the marketing year.

Futures open interest fell 1,358 lots to 262,853 Wednesday, with July’s down 4,625 lots to 123,609, December’s up 3,102 lots to 119,831 and March’s up 33 lots to 12,783.

Certified stocks grew 2,425 bales to 387,267. There were 3,531 newly certified bales and 1,106 bales decertified. Awaiting review were 6,424 bales, including 1,936 at Galveston and 4,488 at Memphis.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent May 18, 2017