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DTN Cotton Close: Mixed Amid Uncertain Storm Damage

Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 13, 2017

DTN Cotton Close: Mixed Amid Uncertain Storm Damage

©Debra L Ferguson Stock Photography

U.S. crop estimate didn’t fully reflect damage from Hurricanes Irma in the Southeast and Harvey in Texas. Record Texas crop of 9.3 million bales led by record 5.695 million bales projected for the High Plains.

Cotton futures settled mixed Wednesday, down 73 to up 26 points, with December finishing near unchanged after falling as much as 744 points from Friday’s contract high.

December settled off two ticks to 69.09 cents, around the upper third of its 115-point range between down 80 points at 68.31 and up 35 points at 69.46 cents. March edged up 13 points to close at 68.60 cents, while October lost the most to finish at 69.98 cents.

Volume slipped to an estimated 39,602 lots from 42,990 lots the prior session when spreads accounted for 14,980 lots or 35%, EFS 375 lots and EFP 127 lots. Options volume declined to 11,960 lots (6,831 calls and 5,129 puts) from 14,563 lots (6,184 calls and 8,379 puts).

Uncertainties about storm damages on U.S. crop quantity and quality may have offered support. The USDA’s September crop estimates didn’t fully reflect damage from Hurricanes Irma in the Southeast and Harvey in Texas, the agency said in a special note on Tuesday.

When Irma crossed the lower Florida Keys with sustained winds near 130 mph on Sept. 10, it marked the first time two Category storms had made a U.S. landfall in the same year, USDA said. Two weeks earlier, Harvey surged inland near Rockport, Tex., also packing 130 mph winds.

The USDA said it will review the acres for harvest for Texas and Louisiana for the October report. It projected the Texas upland crop at a record 9.3 million bales, up from 8.1 million bales last year and the previous high of 8.44 million bales in 2005.

Crops affected by Irma in Alabama, Florida, Georgia and South Carolina also will require more attention. Georgia, the nation’s second largest cotton state, bore the brunt of the cotton damage in the Southeast.

Georgia’s crop, which was 51% open as of Sunday, was estimated at 2.7 million bales off a yield of 1,013 pounds per acre, up from last year’s 2.18 million bales and 898 pounds.

In Texas, production on the High Plains, outside the area affected by Harvey, is projected at a record 5.695 million bales, just above the prior mark of 5.677 million bales in 2005 and 11% more than the 5.118 million bales harvested in 2016.

Production in the adjoining Rolling Plains is forecast at 1.145 million bales, down from 1.244 million bales last year. This puts the projected output in the West Texas Plains at 6.84 million bales, 73% of the statewide production and 32% of the U.S. upland crop.

Crop prospects in the High and Rolling Plains combined rose by a net 590,000 bales from the August forecast, while the statewide projection was up 500,000 bales. Estimates also rose by 90,000 bales to 300,000 for the Edwards Plateau and by 65,000 bales to 715,000 for the Coastal Bend.

District estimates elsewhere fell 60,000 bales to 240,000 in the Blacklands, 25,000 bales to 100,000 in the South Central, 100,000 to 475,000 in the Upper Coast and 25,000 to 425,000 in the Lower Rio Grande Valley. Smaller cotton districts accounted for a drop of 35,000 bales to 205,000.

Futures open interest declined 1,986 lots to 243,886 on Tuesday, with December’s down 2,907 lots to 144,399 and March’s up 551 lots to 70,603. Certified stocks dropped 1,396 bales to 7,006.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 13, 2017