DTN Cotton Close: Settles on 8 Week High

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Tighter U.S. old-crop ending stocks and a resulting cut expected in 2017-18 beginning stocks offered support. U.S. upland growers had contracted about 8% of their expected acreage by Aug. 1.

Cotton futures settled higher Tuesday, up 21 to 69 points across the board, with December posting a new intraday high since June 14.

December closed up 58 points to 71.13 cents, its highest finish since June 13 and just off the high of its 101-point range from down 37 points at 70.18 — a three-session low — to up 64 points at 71.19 cents.

March gained 54 points to settle at 70.79 cents, near the high of its 91-point range from 69.92 to 70.83 cents. October gained the most, settling at 71.91 cents, also near the high of its 132-point range from 70.62 to 71.94 cents.

Tighter U.S. old-crop ending stocks and a resulting cut in 2017-18 beginning stocks expected in the U.S. 2017-18 carryout in USDA’s monthly supply-demand estimates on Thursday offered support. Talk has circulated that 2017-18 ending stocks also may be reduced.

Volume totaled an estimated 20,272 lots, compared with 20,612 lots the prior session when spreads accounted for 10,475 lots or 51% and EFP 123 lots. Options volume rose to 3,597 lots (759 calls and 2,838 puts) from 2,492 lots (1,595 calls and 897 puts).

U.S. upland cotton growers had contracted about 8% of their expected 2017 acreage by Aug. 1, up from 4% a year earlier, according to informal surveys by USDA’s Agricultural Marketing Service.

By comparison, forward contracting at the end of July each season totaled 2% in 2015, 8% in 2014, 12% in 2013, 10% in 2012, 26% in 2011, 16% in 2010, 3% in 2009 and 10% in 2008.

As usual, contracting has been most active in the Southeast on bookings of 13%, up from 8% last year. The region’s largest percentages were 17% in Georgia and 18% in Virginia, up from 7% and down from 22% in 2016, respectively.

Producers in the Delta states had booked 10%, about the same as the prior year. Contracting there has been most active in Louisiana at 35%, down from 59% last year, and 11% in Arkansas, up from 9% a year ago.

In the Southwest, about 6% of the acreage was under contract, compared with less than 1% last year. Growers in Texas had booked 7%, up from less than 0.5% a year ago.

Four percent of the acreage in the West had been booked, compared with 5% last year. Bookings included 7% in Arizona, compared with 8% the previous year.

These estimates are based on the National Agricultural Statistics Service’s June planted acreage report. They don’t include cotton consigned to marketing organizations but do include cotton contracted with them.

Futures open interest gained 224 lots Monday to 216,963, with December’s down 1,738 lots to 151,811 and March’s up 1,409 lots to 45,826. Certified stocks declined 639 bales to 22,228.


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