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DTN Cotton Close: Ends Higher for 3rd Straight Day

Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 17, 2017

DTN Cotton Close: Ends Higher for 3rd Straight Day

©Debra L Ferguson Stock Photography

March hit its highest intraday price since Sept. 12 before closing in lower half of range. Support stemmed partly from record high unpriced mill on-call sales. Lower micronaire readings noted in Texas Plains.

Cotton futures settled higher for the third session in a row Thursday, up seven to 57 points, with most-active March climbing to its highest intraday price since Sept. 12 and finishing with a slight gain.

March edged up 17 points to close at 69.35 cents, in the lower half of its tight 69-point range from up 57 points at 69.75 cents to down 12 points at 69.06 cents. December gained the most, closing at 69.78 cents, in the upper half of its 87-point range from 69.21 to 70.08 cents, its highest intraday price since Oct. 24.

For the week, March gained 21 points and December 73 points. First notice day for December deliveries is next Friday, a day after the Thanksgiving Day holiday.

Volume dipped slightly to an estimated 40,852 lots from 41,881 lots the previous session when spreads accounted for 26,093 lots or 62%, EFS 3,000 lots and EFP 101 lots. Options volume increased to 8,233 lots (6,969 calls and 1,264 puts) from 3,657 lots (2,537 calls and 1,120 puts).

Support stemmed partly from mill on-call sales having reached a record high for the third week in a row and the ninth in the last 11 weeks on the heels of an earlier report showing the largest U.S. weekly export sales since January 2015.

Mill on-call sales rose by a net 6,032 lots or 603,200 bales to 147,500 lots or 14.75 million bales last week, call data reported by the Commodity Futures Trading Commission showed after the close Thursday. The buildup is viewed as offering scale-down support.

Producers added a net 249 lots or 24,900 bales to hike their unpriced position to 36,619 lots or 3.662 million bales, resulting in a 5,783-lot boost to 110,881 in the net call difference, which was 48.5% of the open interest.

A year ago, unfixed positions were 89,014 lots for mills and 23,693 lots for producers, and the net call difference of 65,321 lots represented 26.6% of the total open interest.

In December, mills had reduced their unpriced positions for the week 2,705 lots to 15,668 and producers had cut theirs 1,087 lots to 10,875. In March, mill sales rose by 4,632 lots to 49,620 and the producer position by 257 lots to 8,234.

On the crop scene, lower micronaire readings, a measure of fiber maturity, figured prominently in round-table discussions of area crop conditions Friday at a meeting of the Lubbock-based Plains Cotton Growers, Inc. advisory committee.

Below-normal heat units in August, a late-season spell of cool, cloudy weather and an early freeze resulted in sizable amounts of cotton falling into discount mike readings. Late plantings also were a factor.

Micronaire readings in the discount range of 3.4 and lower totaled 57% last week at Lubbock and have been averaging around 3.3 this week. Lower mike readings are associated with lower boll weights and thus yields. This may explain why some growers say yields haven’t met expectations.

There are areas of good micronaire, however, and color grades have improved. Color grade 31 (middling) and higher rose to 86.1% at Lamesa in the southern High Plains this week from 82.2% last week and light spots declined to 11.9% from 15.7%. Mikes at Lamesa averaged 3.78 this week.

Harvest progress was reported “all over the place,” with some producers finished and others just getting started. About 45% to 50% has been harvested in some counties and about 25% in others.

Futures open interest fell 1,032 lots to 223,718 on Thursday, with December’s down 5,530 lots to 19,530 and March’s up 2,697 lots to 144,080. Certified stocks dipped 19 bales to 47,951.

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Ernst Undesser
By Duane Howell DTN Cotton Correspondent November 17, 2017