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DTN Cotton Open: Ticks Slightly Lower Ahead of Key Report

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 12, 2017

DTN Cotton Open: Ticks Slightly Lower Ahead of Key Report

Market traded in wait-and-see mode ahead of USDA’s October supply-demand report scheduled for release at 11 a.m. CDT. Cash online sales increased to 2,294 bales on The Seam.

Cotton futures ticked slightly lower early Thursday, continuing to trade in a wait-and-see manner ahead of USDA’s key monthly supply-demand report scheduled for release later in the session.

December eased 11 points to 68.62 cents, trading within a 70-point range between 68.41 and 69.11 cents on a contract volume of 2,154 lots. March dipped 21 points to 68.09 cents, trading also within a 70-point span between 67.91 and 68.61 cents on a turnover of 1,109 lots.

The October supply-demand report is scheduled for release at 11 a.m. CDT. Analysts polled by The Wall Street Journal estimated U.S. production at an average of 21.31 million bales and ending stocks at 5.74 million, compared with USDA’s September forecasts of 21.76 million and 6 million, respectively. They expected on average a small increase in world production and little change in ending stocks.

In outside markets, U.S. dollar index futures traded up 0.170 to 92.995, recouping earlier losses after Federal Reserve policy meeting minutes showed a more guarded view on inflation. Dow Jones futures ticked down 21 points and S&P futures down 4.75 points as big banks kicked off earnings season reports.

Crude oil dropped 66 cents to $50.64, Brent crude fell 57 cents to $56.37 and December gold gained $5.40 to $1,294.30. December corn was flat, November soybeans up 0.26%, December Chicago wheat up 0.17% and December Kansas City wheat up 0.29%.

Asian stocks closed mostly higher, up 0.35% in Japan’s Nikkei 225, 0.24% in Hong Kong’s Hang Seng and 0.68% in South Korea’s Kospi and down .02% in China’s Shanghai Composite Index. European shares traded mostly lower, up 0.4% in Britain’s FTSE 100, down 0.07% in Germany’s DAX and down 0.28% in France’s CAC 40.

China’s Zhengzhou cotton futures and prices on the China National Cotton Exchange settled lower.

In ICE cotton futures Wednesday, December traded from up 50 points to down 49 points and settled with a slight loss around the lower third of the 99-point range on light volume.

The inverted December-March straddle traded between 42 and 60 points and narrowed 14 points to close at a 43-point December premium on a volume of 3,255 lots. March-May traded between 71 and 56 points carry and widened eight points to settle at a 70-point May premium on 588 lots. May-July widened four points to 48-point July settlement on 207 lots.

Cash online sales increased to 2,294 bales from 914 bales on The Seam. Prices slipped 45 points to an average of 67.66 cents, with premiums over loan repayment rates inching up three points to 15.36 cents. Loan values on the turnover dipped to 52.31 cents from 52.78 cents. Offerings were 7,948 bales.

Grower-to-business sales of 600 bales brought prices averaging 64.84 cents and business-to-business sales of 1,694 bales averaged 68.66 cents per pound. The G2B sales included 378 bales of staples 35 or more and 222 bales of staples 34 or less, while the B2B sales included 1,442 bales and 252 bales, respectively.

The Cotlook A Index of world values remained at 78.80 cents for the third straight day, leaving the premium over the prior-session December futures settlement at 9.85 cents.

Ten October delivery notices issued Thursday brought the total for the period to 57. This may have wiped out October’s open interest, which totaled 19 lots going into Wednesday’s session not counting that day’s nine notices.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 12, 2017