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DTN Cotton Open: Market Yo-Yoes on Modest Gains

Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 14, 2017

DTN Cotton Open: Market Yo-Yoes on Modest Gains

©Debra L Ferguson Stock Photography

U.S. harvesting advanced 10 points to 64% completed. Harvest reached 55% completed in Texas and was most advanced at 72% to 100% off the stalk in the Delta. Trend-following funds reduced net longs by 5,695 lots.

Cotton futures yo-yoed in the green in early trading Tuesday, with December and March ticking modestly higher following slight closing losses the prior session.

December hovered up 31 points at 69.19 cents, trading within a 49-point range from 68.90 to 69.39 cents on a contract volume of 2,833 lots. March gained 24 points to 69.17 cents, trading within a 42-point range from 68.94 to 69.36 cents on a turnover of 3,045 lots.

In outside markets, U.S. dollar index futures traded down 0.395 to 93.995, while Dow Jones futures ticked down 49 points and S&P futures 5.75 points amid concerns about pending tax plans in Congress and the economy’s ability to deal with more rises in interest rates.

Crude oil dipped 32 cents to $56.44, Brent crude dropped 38 cents to $62.78 and December gold fell $6.70 to $1,272.20. December corn was down 0.22%, January soybeans up 0.28%, December Chicago wheat down 0.06% and Kansas City wheat down 0.29%.

Asian stocks closed mostly lower, flat in Japan’s Nikkei 225 and down 0.1% in Hong Kong’s Hang Seng, 0.15% in South Korea’s Kospi and 0.52% in China’s Shanghai Composite Index following data showing weak China manufacturing data. European stocks were trading mostly lower, up 0.22% in Britain’s FTSE 100, down 0.22% in Germany’s DAX and off 0.34% in France’s CAC 40.

China’s Zhengzhou cotton futures retreated slightly and prices settled mostly lower on the China National Cotton Exchange. India’s MCX cotton futures were modestly higher following substantial gains on Monday.

On the U.S. crop scene, cotton harvesting advanced 10 percentage points to reach 64% completed during the week ended Sunday, four points ahead of last year and even with the five-year average.

The pace picked up from eight points the prior week when the harvest was a point behind a year ago and the average, according to the USDA progress report released after the close Monday, later than usual because of the holiday on Friday in observance of Veterans Day.

The Texas harvest moved at an 11-point clip to 55% completed, up from 41% last year and 53% on average. Harvesting continued in the Plains, Cross Timbers and Edwards Plateau but was slowed by humidity and precipitation in many areas of those districts. Improved harvest weather is expected on the Plains this week.

Harvesting was most advanced in the Delta, ranging from a point behind average at 72% completed in Tennessee to 100% and a point ahead of average in Louisiana. Arkansas, Mississippi and Missouri were all 92% to 93% harvested. In the Southeast, Georgia’s crop was 69% picked, up five points from the average.

Meanwhile, trend-following funds reduced their net longs 5,695 lots to 44,347 in cotton futures-options combined during the week ended Nov. 7, according to traders-commitments data reported by the Commodity Futures Trading Commission.

They added 4,266 shorts and liquidated 1,429 longs during a reporting week in which futures eased 31 points, basis December, and traded within a 136-point range between 68.01 and 69.37 cents. Index funds added 919 lots to lift their net longs to 69,909 lots, while non-reportable traders hiked their net shorts 369 lots to 1,745.

Commercials bought 5,145 lots, covering 3,333 shorts and adding 1,812 longs to reduce their net shorts to 112,511 lots. Combined open interest rose by 1,635 lots to 301,320.

In ICE cotton futures Monday, December reversed from a 13-session high to close with a small loss, remaining above the midpoint (68.53) of the eight-week range from 66.84 to 70.22 cents.

The December-March spread traded between eight points of carry and an eight-point inversion and narrowed four points to settle at a five-point March premium on a volume of 16,302 lots. March-May traded between 100 and 86 points carry and widened four points to close at a 98-point May premium on 2,414 lots. May-July’s settlement difference widened two points to a 51-point July premium on 794 lots.

Cash online trading increased to 12,421 bales from 4,735 bales on The Seam. Prices averaged 68.61 cents, up from 68.24 cents, with premiums over loan values 16.87 cents, up from 16.55 cents. Loan values eked up to an average of 51.74 cents from 51.69 cents. Offerings were 69,310 bales.

Grower-to-business sales rose to 7,785 bales on prices averaging 67.55 cents, while business-to-business sales climbed to 4,636 bales and averaged 70.40 cents. The B2B sales included 2,146 bales from the Mid-South, all stapling 35 or more, that brought an average of 73.40 cents.

The Cotlook A Index of world values gained 55 points to 79.90 cents, narrowing the premium over the prior-day December futures settlement to 10.85 cents.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 14, 2017