DTN Cotton Close: Strong Day for Futures

Fields remained under water in many areas of Southeast. Harvest continued steadily in Delta. Drought area expanded in Mississippi. Texas Coastal Bend harvest reached 80%. Freeze dates eyed on the Plains. Hail hit Arizona cotton. Ginning began in San Joaquin Valley.

Cotton futures closed higher for the fourth session in a row Monday, with spot December finishing above the prior three weekly highs.

December settled up 62 points to 71.19 cents, its highest close since Sept. 22 and just off the high of its 141-point session range from down 72 points at 69.85 to up 69 points at 71.26 cents. It printed its highest intraday price since Sept. 23.

March finished up 60 points to 71.49 cents, while December 2017 gained 32 points to settle at 71.06 cents.

Volume slipped to an estimated 24,612 lots from 28,520 lots the previous session when spreads accounted for 13,908 lots or 49% and EFP 88 lots. Options volume totaled 6,195 calls and 1,671 puts.

Federal, state and local officials worked last week to assess agricultural damage in the Southeast in the aftermath of Hurricane Matthew, USDA reported in a weekly cotton review.

Fields remained underwater in many counties and officials noted that producers in the worst affected areas faced challenges similar to flooding during October 2015, the Agricultural Marketing Service said. Some early estimates indicated significant loss of cotton in flooded areas.

Aside from areas under water, local estimates indicated yield and quality loss varied. Strong wind and heavy rain blew lint from bolls and whipped around and laid down plants in many areas. However, sunny, breezy weather helped soils to firm and bleach out lint. Producers were advised to slow down pickers and make sure lifters were properly adjusted when harvesting wind-damaged cotton.

Clear, warm conditions prevailed in areas of the Lower Southeast not affected by the hurricane, which made landfall on the South Carolina coast on Oct. 8 after raking the Florida and Georgia coastlines.

A few light showers brought about a tenth of an inch to most areas of the North Delta late in the reporting week, but defoliation, picking and ginning didn’t slacken under mostly excellent conditions. Modules continued building on gin yards. Most yields were above average and producers were generally satisfied with classing results.

Harvesting progressed steadily in the South Delta under hot, dry weather. A high fire danger alert remained in effect for Central and North Mississippi. The area of moderate and extreme drought expanded.

In Texas, the northern Blackland Prairies harvest reached 65% to 80% completed, estimates indicated. Yields varied from 450 to 1,000 pounds of lint per acre, depending upon location and the amount and timing of rainfall. Harvesting was about 80% completed and ginning was at the halfway mark in the Winter Garden and Coastal Bend.

Growers applied boll openers and defoliants in the West Texas Plains. Some planned to time defoliant applications ahead of freezing temperatures for improved efficiency. Normal first freeze dates in the main High Plains cotton area range from Oct. 20 at the Muleshoe Wildlife refuge in the northwest, Oct. 31 at Lubbock and Nov. 4 at Lamesa to the south.

More West Texas gins initiated operations and some were expected to start a second shift in about 10 days. Ginning costs were reported at 1.80 to 1.90 per 100 pounds of raw cotton scale weights. Cottonseed prices were around $215 per ton.

Harvesting expanded under sunny skies in Central Arizona, while severe thunderstorms brought heavy rain and hail to high elevation cotton areas at Safford. Industry estimates indicated 3,000 to 3,500 acres of cotton were lost to hail.

Defoliation and harvesting continued uninterrupted in the San Joaquin Valley. With rain in the near-term forecast, some producers harvested into late evenings. Limited ginning began.

Futures open interest expanded 1,913 lots Friday to 242,851, with December’s down 1,213 lots to 145,119 and March’s up 2,934 lots to 65,032. Cert stocks were unchanged at 29,155 bales.

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