DTN Cotton Open: Ticks Narrowly Mixed As Dec. Eases

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December ticked above the prior-session high overnight. Temperatures hit a record date high of 112 degrees at Lubbock on Saturday. Trend-following funds chopped their net longs to 70,485 lots, smallest since Oct. 11, 2016.

Cotton futures ticked narrowly mixed early Monday, with most-active December trading fractionally lower after climbing overnight above the prior-session high.

December hovered off 10 points to 69.26 cents, trading within a 115-point range from 70.20 to 69.05 cents on a contract volume of 4,185 lots. July, where first notice day arrives next Monday and which posted a triple-digit gain overnight, ticked up six points to 71.94 cents. It traded within a 165-point range from 73.40 to 71.75 cents on a turnover of 1,949 lots following the expiration of July options on Friday.

In outside markets, U.S. dollar index futures gained 0.165 to 97.31, while Dow Jones futures rose by 71 points and S&P futures 7.50 points. Crude ticked up 4 cents to $44.78, Brent crude added 5 cents to $47.42 and August gold slipped $5.50 $1,251. December corn was down 1.1%, November soybeans up 0.3%, July wheat up 0.5% and July Kansas City wheat up 0.7%.

Earlier, Asian stocks closed higher, up 0.62% in Japan’s Nikkei 225, 1.16% in Hong Kong’s Hang Seng, 0.38% in South Korea’s Kospi and 0.7% in China’s Shanghai Composite. European stocks traded higher, up 0.44% in Britain’s FTSE 100, 0.82% in Germany’s DAX and 0.91% in France’s CAC 40.

China’s Zhengzhou cotton futures and prices on the China National Cotton Exchange closed mostly higher. India’s MCX cotton futures were mixed.

On the weather front, temperatures set a record date high of 112 degrees on Saturday at Lubbock, eclipsing the prior mark of 107 in 1924 and matching the June 26 high in the historic drought of 2011.

The mark Saturday was just shy of the all-time Lubbock high of 114 degrees set on June 27, 1994. A cool front dropped the high to 84 degrees on Sunday, breaking a string of eight consecutive days of 100-plus readings in the Lubbock area. But a quick warmup to the upper 90s and triple-digits is expected by Wednesday. No rain is expected until slight chances next weekend.

Extreme heat combined with below-normal rainfall, a sizable dryland acreage where stands still haven’t been achieved and persistent winds and crop-damaging hail in some of the thunderstorms that have developed have generated industry talk of higher-than-expected abandonment on the Texas High Plains.

Meanwhile, trend-following funds chopped their net longs by 11,270 lots or 13.8% to 70,485 lots during the week ended Tuesday, according to traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

That marked their fourth straight net long weekly reduction and the fifth in the last six weeks. Their net longs were the lowest since Oct. 11, 2016. Index funds boosted their net longs 986 lots to 71,124, while traders with non-reportable positions cut theirs 3,624 lots to only 157.

Commercials bought 13,907 lots, covering 11,981 shorts and adding 1,926 longs to reduce their net shorts to 141,766 lots. Combined open interest increased 2,381 lots to 281,567.

In futures only, non-commercials cut their net longs 4.3 percentage points to 32.2% of the open interest. Non-commercials sold 10,048 lots, liquidating 6,629 longs and adding 3,419 shorts to cut their net longs to 75,544 lots. Open interest dipped 255 lots to 234,543.

In ICE cotton futures Friday, July and December came off new lows for the move to close with only fractional losses. For the week, July lost 381 points and December 313 points.

The inverted July-December spread traded from 280 to 203 points and widened eight points to settle at a 252-point July premium on a volume of 7,935 lots. December-March traded between premiums of 17 points on March and 10 points on December and settled at six points March/over from three points December/over on 1,651 lots.

The Cotlook A Index of world values dropped 130 points to 83.40 cents, widening the premium over the prior-day July futures settlement 29 points to 11.49 cents.

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