DTN Cotton Close: May Hits New Contract High
May posted the highest spot futures close since June 2014. U.S. weekly export sales slowed but still considered constructive. Shipments also slowed but remained well above the pace needed to reach the USDA forecast.
Cotton futures extended the march to higher ground Thursday, led by May as it surged the 300-point daily limit, hit a new contract high and finished on the highest spot close since June 2014.
The May contract, now just one trading session removed from first notice day, settled up 240 points at 80.07 cents. It traded within a 300-point range from unchanged at 77.67 cents up to 80.67 cents, topping its old contract peak of 79.46 cents set on March 6.
Mill on-call fixations have contributed to lifting May up to 732 points or 10% from its April 10 low.
July gained 79 points to settle at 79.11 cents, its highest close since March 17. It traded within a 106-point range, from up a point at 78.33 cents to up 107 points at 79.39 cents, above highs of the previous three weeks.
December rose 40 points to finish on a 16-session high close at 74.86 cents, just off the high of its 50-point range from 74.40 to 74.90 cents.
Volume slowed to an estimated 32,125 lots from 36,008 lots the previous session when spreads accounted for 18,726 lots or 52% and EFP 91 lots. Options volume slipped to 5,796 lots (4,799 calls and 997 puts) from 5,922 lots (3,606 calls and 2,316 puts).
U.S. weekly export sales slowed about as generally expected and still were considered constructive. Shipments also slowed but remained well ahead of the pace needed to reach the USDA forecast.
Net all-cotton export sales for shipment this season of 237,000 running bales during the week ended last Thursday, down from 316,900 RB the week before, boosted 2016-17 commitments to 13.692 million RB.
Commitments — outstanding sales of 4.138 million RB plus shipments — were 5.657 million RB ahead of year-ago bookings and were nearly 101% of the latest USDA export forecast. A year ago, commitments were 91% of last season’s final shipments.
All-cotton shipments of 367,200 RB, down from 458,200 RB the previous week, brought exports for the season to 9.554 million RB. Exports were 4.062 million RB or still 74% ahead of shipments a year ago.
Shipments reached 70% of the projected total, compared with 62% of final 2015-16 exports at the corresponding point last season. To achieve the forecast, shipments need to average roughly 268,400 RB a week over the 15 weeks remaining in the marketing year.
All-cotton sales of 118,300 RB for shipment next season lifted weekly sales for both crop years to 364,900 RB and hiked 2017-18 commitments to 2.175 million RB, up from forward sales a year ago of 1.151 million RB.
Futures open interest declined 971 lots Wednesday to 238,307, with May’s down 5,059 lots to 6,030 lots, July’s up 2,056 lots to 128,053 and December’s up 1,875 lots to 92,057.
Stocks in deliverable position grew 3,082 lots to 301,768. There were 4,662 newly certified bales and 1,580 bales decertified. Awaiting review were 2,206 bales at Galveston.
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The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.