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DTN Cotton Close: Settles Flat to Little Changed

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 10, 2017

DTN Cotton Close: Settles Flat to Little Changed

©Debra L Ferguson Stock Images

Light frosts, freezes recorded in the northern Texas Plains. U.S. upland growers have contracted 10% of their expected acreage. Upland loans outstanding declined 3,202 RB to 128,298. Cotton analysts projected U.S. crop of 21.31 million bales ahead of USDA forecast.

Cotton futures chopped back and forth on a worn trading-range treadmill and finished unchanged to down 10 points Tuesday.

December settled flat at 68.95 cents, around the lower third of its 117-point range from up 93 points at 69.88 to down 34 points at 68.61 cents. It has climbed above its flattened 50-day moving average four consecutive sessions but has closed below it each time. March closed down four ticks to 68.38 cents, trading within a 115-point range from 69.23 to 68.08 cents.

Light frosts and freezes in the northern Texas High Plains overnight saw temperatures fall to 31 degrees at Dimmitt and 33 degrees at Friona where a trace of sleet fell. Lows were 40 degrees at Lubbock and 43 degrees at Lamesa to the south. A slow warmup under sunny skies to near to above-normal temperatures is forecast to the weekend when a slight chance for showers and thunderstorms returns to the Lubbock area.

Volume increased to an estimated 20,687 lots from 15,492 lots the prior session when spreads accounted for 7,115 lots or 46% and EFP 19 lots. Options volume slipped to 1,740 lots (815 calls and 925 puts) from 2,496 lots (1,533 calls and 963 puts).

In physical trading, U.S. upland growers had contracted about 10% of their expected acreage coming into October, up from 5% a year ago, according to informal estimates by the cotton program of USDA’s Agricultural Marketing Service.

The estimates, based on the National Agricultural Statistics Service’s September forecast of acres for harvest, don’t include cotton consigned to marketing organizations but do include cotton contracted with them.

Contracting has been most active in the Southeast and Midsouth at about 14% and 15%, respectively, up from about 12% in both regions last year. Growers had booked 7% in the Southwest and 4% in the West, up from 1% and down from 6%, respectively, through the corresponding period last season.

Producers in the two largest cotton-producing states had contracted 8% in Texas and 20% in Georgia, up from 1% and 15%, respectively, last year. Nationally, the 10% under contract was the largest since producers had booked 16% by Oct. 1 in 2013.

Separately, the latest USDA figures showed U.S. 2017-crop upland cotton under loan declined 3,202 running bales to 128,298 RB during the week ended Oct. 2.

Repayments were made on 35,683 RB and entries were 32,481 RB. Outstanding loans were all Form G issued to marketing cooperatives or loan servicing agents. No Form A loans had been issued to individual growers.

Meanwhile, cotton analysts polled by The Wall Street Journal projected a U.S. 2017 crop of 21.31 million bales within a range from 21 million to 21.5 million bales.

The average is down 450,000 bales from USDA’s September forecast but up 4.14 million bales from the estimated 2016 production. The USDA’s monthly crop and supply-demand estimates are set for release at 11 a.m. CDT on Thursday.

Analysts estimated exports at 14.75 million bales within a range of 14.5 million to 15 million bales and projected ending stocks at 5.74 million bales within a range from 5.4 million to 6.1 million. Those compare with USDA’s 14.9 million bales in exports and 6 million in stocks.

Futures open interest dipped 208 lots to 229,766 on Monday, with December’s down 1,211 lots to 127,228 and March’s up 716 lots to 70,044. Certified stocks were unchanged at 5,445 bales.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 10, 2017