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DTN Cotton Open: Ticks Narrowly Mixed

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 20, 2017

DTN Cotton Open: Ticks Narrowly Mixed

©Debra L Ferguson Stock Images

Unpriced mill sales hit a new all-time high of 13.9 million bales. Passage of Senate budget proposal lifts U.S. dollar and stocks. Cash online sales increased to 915 bales on The Seam.

Cotton futures ticked narrowly mixed in quiet early dealings Friday, positioned in spot December for a loss for the second week in a row and down for the fifth time in six weeks.

December, confined within the overnight and prior-day ranges, hovered down a point at 67.30 cents, trading within a tiny 30-point range between 67.28 and 67.58 cents on a contract volume of 1,372 lots. It closed last Friday at 68.62 cents. March ticked up five points to 67.06 cents, trading within a 27-point span between 67 and 67.27 cents on a turnover of 383 lots.

This is the last trading day for November options, for which the underlying future is December.

Unpriced mill on-call sales hit a new all-time high last week, rising by a net total 3,429 lots (342,900 bales) to 139,016 lots (13.902 million bales), according to data reported by the Commodity Futures Trading Commission after the close Thursday.

Producers priced a net 385 lots to reduce their total unpriced position to 37,275 lots. The net call difference widened 3,714 lots to 101,741, which was 44.3% of the open interest, compared with 42.6% a week earlier.

A year ago, the unpriced positions were 84,085 lots for mills and 24,683 lots for producers, while the net call difference of 59,402 lots represented 24.5% of the open interest.

In outside markets, U.S. dollar index futures and stock index futures moved higher after the Senate passed a budget proposal seen as paving the way for tax reform and tax cuts. Greenback futures rose by 0.255% to 93.375, Dow Jones Industrial Average futures ticked up 88 points and S&P futures up 6.25 cents.

Crude oil dropped 38 cents to $50.91, Brent crude slipped 22 cents to $57.01 and December gold fell $4.90 to $1,285. December corn was up 0.14%, November soybeans up 0.35%, December Chicago wheat up 0.52% and December Kansas City wheat up 0.76%.

Asian stocks closed higher, up 0.04% in the Nikkei 225, 1.17% in Hong Kong’s Hang Seng, 0.67% in South Korea’s Kospi and 028% in China’s Shanghai Composite Index. European stocks were trading higher, up 0.35% in Britain’s FTSE, 0.29% in Germany’s DAX and 0.23% in France’s CAC 40.

China’s Zhengzhou cotton futures closed with additional losses and prices settled mostly lower on the China National Cotton Exchange. India’s MCX cotton futures continued to fall.

In ICE cotton futures Thursday, December closed on a modest loss at its lowest finish since Aug. 18, nine ticks below the 67.40-cent low that had stood since Oct. 3. Favorable U.S. harvesting weather ahead for much of the Cotton Belt appeared to outweigh higher-than-expected weekly export sales. The lowest weekly shipments of the marketing year may have been linked partly to difficulties in finding the qualities that were sold.

The inverted December-March spread traded between 27 and 42 points and settled unchanged at a 30-point December premium on a volume of 2,953 lots. March-May traded between 106 and 90 points carry and widened six points to close at a new low at a 101-point May premium on 904 lots. May-July’s settlement difference widened five points to a 72-point July premium on 372 lots.

Cash online sales increased to 915 bales from 389 bales on The Seam. Prices edged up to an average of 67.31 cents from 62.93 cents, reflecting gains to an average of 14.58 cents from 12.95 cents in premiums over loan repayment rates. Loan values on the turnover averaged 48.42 cents, down from 49.98 cents.

Grower-to-business sales increased to 475 bales on prices averaging 62.84 cents, while business-to-business sales climbed to 440 bales on an average price of 63.16 cents. Staples 35 or more made up 310 bales of the grower sales and all of the business sales.

The Cotlook A Index of world values was unchanged at 77.85 cents, widening the premium over the prior-day December futures settlement 14 points to 10.22 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 20, 2017