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DTN Cotton Close: Finishes on Slight Losses

Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 13, 2017

DTN Cotton Close: Finishes on Slight Losses

©Debra L Ferguson Stock Photography

December hit 13-session high before reversing. U.S. upland classing rose to 1.358 million RB last week, boosting the season’s total to 5.926 million RB, about 31% of the crop estimate. Tenderable cotton declined to 73.2% for the week and 78.9% for the season.

Cotton futures finished on slight losses amid expanding U.S. harvesting Monday, unable to hold onto gains to a 13-session high in most heavily traded December.

December slipped 17 points to settle at 68.88 cents, just off the low of its tight 83-point range from up 63 points at 69.68 to down 20 points at 68.85 cents. It posted the highest intraday price since Oct. 25 before reversing down.

Most-liquid March dropped 21 points to close at 68.93 cents, also near the low of its 78-point range from up 49 points at 69.63 to down 29 points at — identical to the December low — 68.85 cents. The other contracts closed down 15 to 35 points.

Higher U.S. production prospects reported last week by USDA and still record high — though down on the month — ending stocks foreseen in the rest of the world outside China may have contributed to the reversal. Mill pricing of on-call sales prior to first notice day for December — now eight trading sessions away — offered support.

Short-covering resulting from a large number of December puts exercised on Friday contributed to the early gains. Exercised were 9,607 calls and 16,748 puts.

Volume increased to an estimated 55,504 lots from 51,217 lots the prior session when spreads accounted for 32,119 lots or 63%, EFS 2,797 lots and EFP 281 lots. Options volume slid to 2,845 lots (2,175 calls and 670 puts) from 5,238 lots (2,246 calls and 2,989 puts).

U.S. upland cotton classing quickened to 1.358 million running bales last week from the prior week’s 1.148 million RB, boosting the season’s total to 5.926 million RB, the latest USDA weekly figures showed. The total was down 2.6% from 6.084 million RB graded a year ago.

Classing reached about 31% of the November upland crop estimate, compared with about 39% of final production last year of 15.439 million RB. Tenderable cotton declined to 73.2% from 75.7% the week before and to 78.9% for the season from 80.6%. Last year, cotton tenderable on futures contracts was 73% for the week and 71.4% for the season.

Grading of the record crop projected for Texas increased to 492,587 RB, about 36% of the U.S. weekly total. This brought statewide classing to 2.588 million RB, about 29% of the estimated production and up from 2.258 million RB graded a year ago.

Texas cotton meeting tenderable requirements fell to 55.8% for the week and 72.4% for the season from 59.3% and 76.3% the previous week. Adverse weather conditions have been mainly responsible for the decline.

Beltwide classing of 51,976 RB of Pima brought the extra-long staple total to 138,354 RB for the season and the all-cotton total of 2017-crop cotton to 6.064 million RB, compared with 135,653 and 6.219 million RB, respectively, a year ago.

Futures open interest dropped 4,570 lots to 228,802 on Friday, with December’s down 9,556 lots to 53,899 March’s up 3,827 lots to 119,776. Contract volumes were 25,118 lots for December and 21,082 lots for March. Certified stocks were unchanged at 46,992 bales.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 13, 2017