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DTN Cotton Open: Ticks Quietly on Small Losses

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 11, 2017

DTN Cotton Open: Ticks Quietly on Small Losses

U.S. cotton harvesting moved up eight points to 25% complete and crop ratings improved. Cash online trading increased to 914 bales on The Seam. IMF raised its forecast for global economic growth.

Cotton futures traded quietly just below unchanged early Wednesday, meandering on light volume within the previous-session range.

December hovered off six points at 68.89 cents, trading within a 70-point range between 68.75 and 69.45 cents on a contract volume of 1,371 lots. March ticked down five points to 68.33 cents, trading within a 65-point range between 68.25 and 68.90 cents on a turnover of 496 lots.

In outside markets, U.S. dollar index futures traded down 0.19 to 92.91 ahead of release of the Federal Reserve’s September policy meeting minutes later in the day, while Dow Jones futures ticked down 65 points and S&P futures 1.75 points.

Crude oil gained 16 cents to $51.08, Brent crude added 8 cents to $56.69 and December gold fell $1.20 to $1,292.60. December corn was down 0.43%, November soybeans down 0.03%, December Chicago wheat down 0.46% and December Kansas City wheat down 0.7%.

Asian stocks closed mostly higher, up 0.28% in Japan’s Nikkei 225, down 0.36% in South Korea’s Kospi, up 1% in South Korea’s Kospi and up 0.26% in China’s Shanghai Composite Index. European shares traded lower, down 0.22% in Britain’s FTSE 100, 0.08% in Germany’s DAX and 0.38% in France’s CAC 40.

In world news, the International Monetary Fund boosted its forecast for global economic growth to 3.6% this year and 3.7% in 2018, the fastest rates since 2010. But easy monetary and financial conditions against a backdrop of sluggish inflation are elevating medium-term risks, IMF said.

On the crop scene, U.S. harvesting advanced eight percentage points to 25% complete during the week ended Sunday and conditions improved on the remainder, according to USDA’s progress report released after the close Tuesday.

The report, released a day later than usual because of the Columbus Day holiday, showed the harvest holding a four percentage point lead over progress a year ago and six points over the five-year average, widening from leads last week of two and four points, respectively,

Cotton in good to excellent condition improved three points to 60%, with poor to very poor up a point to 15%. A year ago, good-excellent was 48% and poor-very poor was 16%.

Boll opening slowed, reaching 72% and widening the lag behind last year to seven points and behind average to six points. The lag behind both a week ago was three points.

In ICE cotton futures Tuesday, December closed unchanged. It has climbed above its flat-lining 50-day moving average four consecutive sessions but has closed below it each time. It got within 12 points of the psychological 70-cent barrier before backing down.

The inverted December-March spread widened four points to close at a 57-point December premium on a volume of 3,938 lots, trading between 52 and 70 points. March-May traded between 66 and 56 points carry and narrowed six points to close at a 62-point May premium on 571 lots. May-July closed unchanged at a 44-point July premium on 521 lots.

Cash online trading increased to 914 bales from 785 bales on The Seam. Prices rose to an average of 68.11 cents from 65.35 cents, reflecting premiums over loan repayment rates averaging 15.33 cents, up from 15.25 cents. Loan values on the turnover averaged 52.78 cents, up from 50.10 cents. Offerings were 7,763 bales.

Grower-to-business sales of 612 bales brought prices averaging 68.63 cents, while business-to-business sales of 302 bales sold for an average of 67.05 cents a pound. The G2B sales included 567 bales of staples 35 or more and all the B2B sales were those staple lengths.

The Cotlook A Index of world values was unchanged at 78.80 cents, narrowing the premium over the prior-day December futures settlement 11 points to 9.85 cents.

Nine additional delivery notices were issued Wednesday on the matured October contract, bringing the total for the period to 47.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 11, 2017