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DTN Cotton Open: Jumps to 5-Session High

Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 23, 2017

DTN Cotton Open: Jumps to 5-Session High

A risk of a widespread freeze is seen for Saturday morning on the Texas High Plains. Trend-following funds reduced their net longs 3,137 lots. Cash online sales increased to 2,000 bales on The Seam.

Cotton futures jumped to triple-digit gains in heavy early dealings Monday, surging to a five-session high in spot December after posting nine lower highs in a row.

December hovered up 159 points to 68.47 cents, trading within a 187-point range from 66.89 touched on the overnight opening to 68.76 cents on a contract volume of 8,399 lots. March ticked up 144 points to 68.21 cents, trading within a 172-point span from 66.83 to 68.55 cents on a turnover of 3,439 lots.

A risk for a widespread freeze is seen for Saturday morning on the Texas High Plains, forecasters say. The normal first freeze date at Lubbock is Oct. 31. The forecast stirred concerns about lower micronaire readings, a measure of fiber fineness or maturity which also can affect boll weights and thus yields.

Forecasts are for a low of 30 degrees Friday night at Lubbock, accompanied by a slight chance of area rain and snow. The normal first freeze date at Lubbock is Oct. 31. Early freezes and frosts already have been recorded in parts of the northern and western areas.

In outside markets, U.S. dollar index futures traded up 0.285 to 93.865, while Dow Jones Industrial Average futures gained 23 points and S&P futures 1.75 points.

Crude oil ticked up 14 cents to $51.98, Brent crude dropped 16 cents to $57.59 and December gold fell $6 to $1,274.45. December corn was up 0.07%, November soybeans down 0.05%, December Chicago wheat flat and December Kansas City wheat up 0.06%.

Global stocks started the week mostly higher, supported by a banner session on Wall Street and landslide weekend elections victory for Japanese Prime Minister Shinzo Abe’s coalition government. Abe’s win raised hopes of continued market-friendly monetary policies and economic reforms, Dow Jones Newswires reported.

Asian stocks closed up 1.1% in Japan’s Nikkei 225, down 0.64% in Hong Kong’s Hang Seng, up 0.2% in South Korea’s Kospi and 0.28% in China’s Shanghai Composite Index. European shares were trading up 0.2% in Britain’s FTSE 100, up 0.39% in Germany’s DAX and up 0.5% in France’s CAC 40.

China’s Zhengzhou cotton futures closed mostly lower and prices ended mixed on the China National Cotton Exchange. The Indian government announced additional support for cotton farmers.

Meanwhile, trend-following funds reduced their net longs 3,137 lots to 48,748 in ICE cotton futures-options combined during the week ended Tuesday, according to the traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

Prices lost 118 points during the reporting week, basis December, and traded from 69.45 to 67.43 cents. Index funds cut their net longs 677 lots to 70,177, while traders with non-reportable positions increased their net shorts 298 lots to 480.

Commercials bought 4,112 lots, adding 3,043 longs and covering 1,069 shorts to reduce their net shorts to 118,386 lots. Combined open interest increased 1,344 lots to 301,128.

In shorts alone, non-commercials trimmed their net longs 2 percentage points to 21.8% of the open interest. They liquidated 2,544 longs and added 2,140 shorts, dropping their net longs 4,684 lots to 49,976. Open interest increased 338 lots to 229,812.

In the market Friday, December settled at its lowest close since Aug. 16, losing 0.64% for the day and 2.54% for the week.

The inverted December-March straddle traded between seven points — lowest since the high of 217 points on Sept. 6 — and 31 points and closed down 18 points at 11-point December premium on a volume of 4,833 lots. March-May traded between 100 and 95 points carry and narrowed two points to close at a 99-point May premium on 746 lots. May-July widened a point pm a 73-point July settlement premium on 79 lots.

Cash online sales increased to 2,000 bales from 915 bales on The Seam. Prices rose to an average of 66.62 from 62.99 cents, with premiums over loan repayment rates down three ticks to 14.55 cents. Loan values on the turnover rose to an average of 52.07 from 48.42 cents.

Grower-to-business sales climbed to 1,640 bales on prices averaging 66.41 cents, while business-to-business sales of 360 bales brought an average 67.60 cents per pound. Staples 35 or more accounted for 1,600 bales of the grower sales and all the business sales.

The Cotlook A Index of world values slipped 25 points to 77.60 cents, widening the premium over the prior-day December futures settlement seven points to 10.29 cents. The index premium over this week’s AWP widened 46 points to 17.87 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent October 23, 2017