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DTN Cotton Close: Mixed As Dec. Reverses Off New Low

Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 22, 2017

DTN Cotton Close: Mixed As Dec. Reverses Off New Low

©Debra L Ferguson Stock Images

Cooler, rainy weather forecast on the Texas Plains may have chilled the bears. October OI exceeded cert stocks. Mills’ unpriced position hit new record 132,649 lots. U.S. Far East premium narrowed. Cotton under loan rose to 101,472 RB.

Cotton futures finished mixed on light volume Friday, with December reversing from its lowest intraday price since Aug. 22 to close on a modest gain.

December edged up 21 points to settle at 68.46 cents, in the upper half of its 91-point range from down 39 points at 67.86 to up 52 points at 68.77 cents. It still lost 61 points for the week.

March closed unchanged at 67.58 cents, around the middle of its tight 60-point range from 67.30 to 67.90 cents. It dropped 41 points for the week. The other contracts settled up five to down 10 points, with October posting the gain to 69.09 cents.

Cooler temperatures and heavy rains in prospect for the Texas High Plains, coinciding with the first day of fall, may have chilled the bears. There’s an old saying that it always rains during the Panhandle-South Plains Fair, which opened Thursday at Lubbock and runs through next week.

Volume slowed to an estimated 17,279 lots from 22,388 lots the prior session when spreads accounted for 5,564 lots or 25%, EFP 96 lots and EFP 50 lots. Options volume dipped to 7,148 lots (2,881 calls and 4,267 puts) from 9,310 lots (4,160 calls and 5,150 puts).

Something, it would appear, must give in the October contract, which enters its delivery notice period on Monday. October traded 25 lots Friday, coming into the session with an open interest of 134 lots (13,400 bales) and only 2,380 bales (equivalent to 23.8 lots) in certified stocks following the decertification of 34 bales.

Traders noted that mills have boosted their total unpriced on-call position to a new all-time high for the third week in a row.

Mills added 1,596 lots to lift their unfixed holdings across the board to 132,649 lots (13.265 million bales) last week, data reported by the Commodity Futures Trading Commission showed after the close Thursday.

Producers priced 1,268 lots to reduce their unfixed position to 37,167 lots (3.717 million bales). The net call difference climbed 2,864 lots to 95,482 (9.548 million bales), which was 39.5% of the declining open interest, up from 37.6%.

A year ago, unpriced positions were 74,074 lots for mills and 23,760 lots for producers, with the net call difference of 50,313 lots amounting to 21.7% of the open interest.

On the competitive-price front, the average of the five lowest-priced world growths for the Far East declined 236 points to 77.96 cents during the week ended Thursday, according to USDA calculations, while the low U.S. quote landed there fell 255 points to 78.95 cents.

The U.S. premium thus narrowed to 99 points from 118 points. The adjusted world price declined to 60.91 cents from 63.27 cents, with of course the marketing loan gain remaining at zero for the program week that began Friday. For qualities better than 31-3-35, the fine count adjustment for the 2017 crop is 84 points.

Meanwhile, U.S. upland 2017-crop loans outstanding increased 33,899 running bales to 101,472 RB during the week ended Monday, according to the latest USDA figures.

Entries were 58,239 bales and loans were repaid on 24,340 bales. All outstanding loans were Form G issued to marketing cooperatives or loan servicing agents. No Form A loans, issued to individual growers, had been made.

Futures open interest declined 1,217 lots to 237,486 on Thursday, with December’s down 1,731 lots to 135,439 and March’s up 165 to 71,840. The December 2018 contract gained 196 lots to 14,968.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent September 22, 2017