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DTN Cotton Open: Ticks Marginally Lower in Quiet Dealings

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 18, 2017

DTN Cotton Open: Ticks Marginally Lower in Quiet Dealings

©Debra L Ferguson Stock Images

Traders looked to export sales report. U.S. housing starts fell 4.7% in September. Cash online cotton sales declined to 656 bales on The Seam.

Cotton futures ticked marginally lower within the prior-session range in quiet early dealings Wednesday as traders looked to the U.S. weekly export sales-shipment report.

December hovered off 11 points to 67.66 cents, trading within a 63-point range from 68.17 to 67.54 cents on a contract volume of 1,663 lots. March eased 13 points to 67.35 cents, trading within a 59-point range from 67.83 to 67.24 cents on a turnover of 815 lots.

The export sales report for the week ended Oct. 12 is set for release at 7:30 a.m. CDT on Thursday. Upland sales the prior week of 154,400 running bales were down 4% from the four-week average but still ahead of the pace needed to match USDA’s reduced export forecast. Upland exports continued to lag at 118,000 RB, down 11% from the four-week average.

In the news, U.S. housing starts decreased last month for the fifth time in six months, indicating homebuilders are struggling to keep pace with solid buyer demand, Dow Jones Newswires reported.

Housing starts fell 4.7% in September from the prior month to a seasonally adjusted annual rate of 1.127 million, the Commerce Department said. Residential building permits, which can signal how much construction is in the pipeline, fell 4.5% to an annual pace of 1.215 million. Economists had expected a 0.8% decrease for starts and estimated permits down 5.4%.

Housing-starts data are volatile from month to month and can be subject to large revisions. Looking beyond monthly volatility, starts in the first nine months of the year were up 3.1% from the same period in 2016. Permits during the period increased 5% from a year earlier.

People moving into new abodes tend to buy cotton products to go in them. Home furnishings are a significant market for cotton goods.

In outside markets, U.S. dollar index futures traded up 0.100 to 93.450, while Dow Jones futures ticked up 90 points and S&P futures up 3.75 points. Crude oil gained 21 cents to $52.09, Brent crude added 49 cents to $58.37 and December gold fell $5.40 to $1,280.80. December corn was down 0.07%, November soybeans down 0.1% and December Chicago wheat and December Kansas City wheat down 0.52%.

Asian stocks closed mostly higher, with Japan’s Nikkei 225 up 0.13%, Hong Kong’s Hang Seng up 0.05%, South Korea’s Kospi down 0.06% and China’s Shanghai Composite Index up 0.28%. European stocks were trading higher, up 0.36% in Britain’s FTSE, 0.46% in Germany’s DAX and 0.54% in France’s CAC 40.

China’s Zhengzhou cotton futures closed mixed and prices settled with mostly gains on the China National Cotton Exchange. India’s S-6 cotton prices were falling.

In ICE cotton futures Tuesday, December settled on a modest gain, bouncing off a support area to regain part of the prior day’s sharp loss. The nine-day moving average crossed right back below the 18-day MA.

The inverted December-March spread traded between 16 and 43 points and widened eight points to settle at a 29-point December premium on a volume of 4,423 lots. March-May traded between 88 and 80 points carry and closed unchanged at an 84-point May premium on 528 lots. May-July’s settlement difference narrowed three points to a 58-point July premium on 329 lots.

Cash online sales declined to 656 bales from 1,697 bales on The Seam. Prices rose to an average of 65.94 cents from 64.54 cents, reflecting gains to 15.42 cents from 12.90 cents in premiums over loan repayment rates. Loan values averaged 50.53 cents on the turnover, down from 51.64 cents. Offerings were 11,509 bales.

Grower-to-business sales of 185 bales, all stapling 35 or more, brought an average price of 65 cents. Business-to-business sales, including 466 bales of staples 35 or more, sold for an average of 66.31 cents per pound.

The Cotlook A Index of world values dropped 80 points to 77.70 cents, widening the premium over the prior-day December futures settlement 29 points to 10.17 cents. The index premium over this week’s AWP narrowed to 17.26 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 18, 2017