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DTN Cotton Open: Ticks Slightly Higher Within Tight Range

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 17, 2017

DTN Cotton Open: Ticks Slightly Higher Within Tight Range

U.S. import prices rose in September. U.S. cotton harvest reached 31% complete and conditions improved slightly. Cash online sales increased to 1,697 bales.

Cotton futures ticked slightly higher in early dealings Tuesday, with December holding onto a small bounce after touching Monday’s lowest intraday print since Oct. 3.

December hovered up 17 points to 67.70 cents, trading within a tight 43-point range between 67.53 and 67.96 cents on a contract volume of 1,696 cents. March edged up 16 points to 67.48 cents, trading within a 40-point span between 67.32 to 67.72 cents on a turnover of 627 lots.

In the news, overall prices for foreign goods shipped to the United States rose in September, reflecting broad price increases including a jump in fuel costs, Dow Jones Newswires reported.

Import prices increased 0.7% in September from a month earlier, the largest month-over-month rise since an increase of 0.7% in June 2016, the Labor Department said. Economists had expected a 0.6% increase. Unlike most measures of inflation, import prices are not adjusted for seasonality. Outside petroleum, import prices increased 0.3%.

The Labor Department said Hurricanes Harvey and Irma had a “small impact” on the collection of import-price data for September. Over the past year, overall import prices grew 2.7%.

The import-price index is one of several gauges the Federal Reserve studies to understand how quickly prices for products are rising.

In outside markets, U.S. dollar index futures traded up 0.305 to 93.465, while Dow Jones futures ticked up 22 points and S&P futures down a point. Crude oil gained 17 cents to $52.04, Brent crude added 37 cents to $58.19 and December gold fell $1.54 to $1,282.60. December corn was down 0.36%, November soybeans down 0.55%, Chicago December wheat down 0.06% and December Kansas City wheat down 0.12%.

Asian stocks closed mostly higher, up 0.38% in Japan’s Nikkei 225, up 0.02% in Hong Kong’s Hang Seng, up 0.17% in South Korea’s Kospi and down 0.15% in China’s Shanghai Composite Index. European shares were trading mixed, up 0.27% in Britain’s FTSE 100, up 0.05% in Germany’s DAX and down 0.01% in France’s CAC 40.

China’s Zhengzhou cotton futures closed with small changes and prices settled higher on the China National Cotton Exchange. India’s MCX cotton futures fell.

On the U.S. crop scene, harvesting advanced six percentage points to 31% complete during the week ended last Sunday, USDA’s progress report showed after the close Monday, while conditions improved slightly.

The harvest was ahead of last year by two points and up five points from the five-year average, compared with leads a week earlier of 10 points and seven points, respectively. Boll opening rose 10 points to 82%, down from 88% last year and 86% on average.

Crop ratings showed good to excellent dipped two points to 58%, fair rose four points to 29% and poor to very poor slipped two points to 13%. A year ago, good-excellent was 47%, fair 36% and poor-very poor 17%. The DTN cotton condition index inched up two points to 142, up from 121 last year.

In the market Monday, December printed the lowest price since Oct. 3 and finished on a sharp loss back below its nine-day and 18-day moving averages. The nine-day MA crossed above the 18-day MA. The day’s low was 13 points above the Oct. 3 low, which was the lowest since Aug. 22.

The inverted December-March spread traded between 18 and 46 points and narrowed 25 points to close at a 21-point December premium on a volume of 5,136 lots. March-May traded between 86 and 78 points carry and widened three points to settle at an 84-point May premium on 646 lots. May-July widened its settlement difference by a point to a 61-point July premium on 293 lots.

Cash on-line sales increased to 1,697 bales from 888 bales on The Seam. Prices rose to an average of 64.54 cents from 63.24 cents on average premiums over loan repayment rates of 12.90 cents, down from 14.91 cents. Loan values on the turnover averaged 51.64 cents, up from 48.33 cents.

Grower-to-business sales of 1,433 bales brought prices averaging 64.76 cents and business-to-business sales of 264 bales brought an average price of 63.30 cents per pound. The G2B sales included 1,374 bales of staples 35 or more, while all the B2B sales stapled 34 or less.

The Cotlook A Index of world values gained 80 points to 78.50 cents, widening the premium over the prior-day December futures settlement two points to 9.88 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 17, 2017