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DTN Cotton Open: Ticks Sharply Lower Ahead of USDA Report

Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 12, 2017

DTN Cotton Open: Ticks Sharply Lower Ahead of USDA Report

Larger U.S. planted acres expected. U.S. weekly crop conditions declined, with good to excellent down two percentage points to 63%. Cash online sales fell to 431 bales on The Seam.

Cotton futures fell sharply for a second day early Tuesday ahead of USDA’s updated crop and supply-demand estimates later in the day.

December hovered off 111 points to 71 cents, trading within a 152-point range from 72.10 to 70.58 cents on a contract volume of 6,091 lots. March traded down 109 points to 70.38 cents, trading within a 150-point range from 71.50 to 70 cents on a turnover of 1,777 lots.

The USDA reports will be released at 11 a.m. CDT. A question is whether larger planted acres, based on certified figures reported by the Farm Service Agency, will be offset by higher abandonment and lower yields in the U.S. crop forecast, as expected by some analysts. The June report showed plantings of 12.06 million acres, up from 10.07 million last year.

In outside markets, U.S. dollar index futures traded up 0.87 to 91.94 following a strong performance on Monday, while Dow Jones futures gained 54 points and S&P futures 3.75 points. Irma, one of the most powerful Atlantic hurricanes, weakened to a tropical depression on Tuesday, relieving concerns about its overall impact on the economy.

Crude oil ticked up 15 cents to $48.22, Brent crude added 37 cents to $54.21 and December gold fell $5.70 to $1,330. December corn was down 0.35%, November soybeans down 0.08% and December Chicago wheat and December Kansas City wheat both up 0.29%.

Asian stocks closed higher after U.S. equities soared on Monday, with Japan’s Nikkei 225 up 1.18%, Hong Kong’s Hang Seng 0.06%, South Korea’s Kospi 0.27% and China’s Shanghai Composite Index 0.11%. European shares traded mostly higher, down 0.23% in Britain’s FTSE 100, up 0.62% in Germany’s DAX and up 0.62% in France’s CAC 40.

China’s Zhengzhou cotton futures closed mostly lower and prices ended mixed on the China National Cotton Exchange. India’s MCX cotton futures fell sharply.

Meanwhile, U.S. crop conditions declined during the week ended Sunday, with good to excellent down two percentage points to 63%, USDA’s crop progress report showed after the close Monday.

That’s up from 47% a year ago. Fair rose two points to 26% and poor to very poor remained at 11%. The DTN cotton condition index, based on the USDA report, declined two points to 154, up from 120 last year.

Boll opening advanced nine points to 34%, lagging six points behind a year ago and the five-year average. Nine percent was harvested, up from 4% last year and the average.

In top-producing Texas, good to excellent cotton fell two four points to 55%, up from 40% last year, fair rose two points to 30% and poor to very poor also increased two points to 11%.

Twenty-six percent of the Texas bolls were open, down from 29% last year and 32% on average, while 16% was harvested, up from 8% and 9%, respectively.

Georgia’s good to excellent cotton improved four points to 69% and bolls were 51% open, behind 66% last year and the average of 51%. Open bolls totaled 46% in South Carolina, 35% in North Carolina and 32% in Alabama.

In the market Monday, December settled down sharply but off a daily limit loss hit earlier. It closed back below the nine-day moving average.

The inverted December-March straddle traded between 62 and 150 points and narrowed 54 points to settle at a 64-point December premium on a volume of 4,188 lots. March-May traded between 45 and 20 points carry and widened three points to close at a 29-point May premium on 1,238 lots. May-July narrowed eight points to a 14-point closing premium on July on 814 lots.

In cash online trading, sales declined to 431 bales from 1,101 bales on The Seam. Prices fell to an average of 70.37 cents from 72.10 cents, while premiums over loan values dropped to 19.27 cents from 21.33 cents. Offerings were 6,115 bales. The sales, all on the grower-to-business platform, included 235 bales of staples 35 or more and 196 bales of staples 34 or less.

World values as measured by the Cotlook A Index gained 35 points to 84.40 cents, widening the premium over the prior-session December futures settlement three points to 9.81 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 12, 2017