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DTN Cotton Open: Gives Back Prior-Session Gain

Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 19, 2017

DTN Cotton Open: Gives Back Prior-Session Gain

©Debra L Ferguson Stock Images

U.S. crop conditions declined for the third week in a row. Cash online sales increased to 819 bales on The Seam. Basis on the base quality rolled to December at 75 points “on” in the Southeast.

Cotton futures traded lower in relatively quiet early dealings Tuesday, with December giving back the prior-session gain.

December hovered off 41 points to 69.08 cents, trading within a 73-point range from 69.65 to 68.92 cents on a contract volume of 2,179 lots. March ticked down 50 points to 68.40 cents, near the low of its 70-point range from 69.04 to 68.34 on a turnover of 749 lots.

In outside markets, December U.S. dollar index futures fell 0.225 to 91.600, while Dow Jones futures ticked up 13 points and S&P futures 1.50 points ahead of the Federal Reserve’s two-day policy meeting which begins Tuesday and could give clues on the timing of the next interest rate hike.

Crude oil gained 41 cents to $50.32, Brent crude added 28 cents to $55.76 and December gold edged up $1 to $1,311.80. December corn was up 0.36%, November soybeans down 0.03%, December Chicago wheat up 0.56% and December Kansas City wheat up .68%.

Asian stocks closed mostly lower, up 1.96% in Japan’s Nikkei 225 but down 0.38% in Hong Kong’s Hang Seng, 0.09% in South Korea’s Kospi and 0.18% in China’s Shanghai Composite Index. European shares traded mostly higher, up 0.43% in Britain’s FTSE, down 0.15% in Germany’s DAX and up 0.13% in France’s CAC 40.

China’s Zhengzhou cotton futures closed higher and prices ended with gains on the China National Cotton Reserve.

On the U.S. crop scene, weekly conditions declined for the third week in a row, with good to excellent slipping two percentage points to 61%, USDA reported in its progress report after the close Monday.

Poor to very poor rose three points to 14%. Conditions remained considerably better than a year ago when 48% was good to excellent and 16% poor to very poor. The DTN cotton condition index, based on the USDA report, fell 10 points to 144, up from 121 a year ago.

Boll opening advanced 10 points to 44%, widening slightly the gap behind the five-year average of 51%. Eleven percent was harvested, up from the average of 6%.

Ratings improved in Texas, with good to excellent up three points to 58% and poor to very poor down a point to 14%. A year ago, good-excellent was 42% and poor-very poor 20%. Boll opening at 31% was nine points behind average, while harvesting at 18% completed was seven points ahead.

In the market Monday, December finished back above its rising 50-day moving average amid oversold technical readings. However, it remained below its nine-day, 18-day and 40-day MAs.

The inverted December-March straddle traded between 57 and 106 points and narrowed 48 points to settle at a 60-point December premium on a volume of 2,685 lots. March-May traded between 51 and 41 points carry and narrowed eight points to close at a 51-point May premium on 664 lots. May-July narrowed two points to a 36-point July settlement premium on 278 lots.

In cash online trading, sales increased on The Seam to 821 bales from 176 bales. Prices slipped to an average of 65.35 cents from 66.59 cents, reflecting a dip to an average of 15.54 cents from 15.96 cents in premiums over loan values. Offerings were 8,799 bales.

Grower-to-business sales of 302 bales brought prices averaging 65.01 cents per pound and business-to-business sales of 519 bales averaged 65.55 cents. Staples 35 or more accounted for 291 bales of the G2B sales and 373 bales of the B2B sales. All the G2B sales were from the Southwest as well as 373 bales of the B2B turnover.

The basis on the base quality was rolled to December at 75 points “on” in the Southeast, even in the Delta, 75 points off in East Texas-Oklahoma, 125 points off in West Texas, 525 points off in the Desert Southwest and 154 points off in the San Joaquin Valley.

The Cotlook A Index of world values dropped 20 points to 78.90 cents, narrowing the premium over the prior-day December futures settlement 15 points to 9.83 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 19, 2017