DTN Cotton Open: Trades on Slight Gains

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December touched four-session high. Trend-following funds reduced their net long position 3,387 lots or 10.9%. Cash online sales totaled 177 bales on The Seam.

Cotton futures traded on slight gains early Monday, with December bouncing to a four-session high after closing on the plus side two sessions in a row.

December hovered up 15 points to 67.43 cents, trading within a 40-point range from 67.17 to 67.57 cents on a contract volume of 1,814 lots. It extended the rally off last week’s low near the July and June lows. March also edged up 15 points to 67.21 cents, trading within a 37-point range from 66.96 to 67.33 cents on a turnover of 267 lots.

In outside markets, U.S. dollar index futures traded down 0.17 to 93.19, while Dow Jones futures ticked down 18 points and S&P futures 1.75 points. Crude oil dropped 13 cents to $48.38, Brent crude lost 26 cents to $52.62 and December gold gained $2.40 to $1,294. December corn was down 0.89% and November soybeans off 0.51%.

Earlier, Asian markets were mixed, down 0.4% in Japan’s Nikkei 225, up 0.4% in Hong Kong’s Hang Seng, down 0.14% in South Korea’s Kospi and up 0.57% in China’s Shanghai Composite Index. European shares traded mostly lower, up 0.05% in Britain’s FTSE but down 0.32% in Germany’s DAX and 0.28% in France’s CAC 40.

China’s Zhengzhou cotton futures closed with gains and prices ended mostly lower on the China National Cotton Exchange.

Meanwhile, trend-following funds reduced their net longs 3,387 lots or 10.9% to 27,688 lots in cotton futures-options combined during the week ended Tuesday, according to traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

They liquidated 3,129 longs and added 258 shorts during a reporting week in which December lost 397 points. Index funds hiked their net longs 1,614 lots to 73,331, while traders with non-reportable positions boosted their net shorts 1,897 lots to 4,655.

Commercials bought 3,671 lots, adding 2,180 longs and covering 1,491 shorts to reduce their net short position to 73,331 lots. Combined open interest increased 3,085 lots to 272,658.

In futures only, non-commercials reduced their net longs 2.9 percentage points to 14.7% of the open interest. They sold 4,264 lots and added 2,116 shorts, cutting their net longs to 32,207 lots. Open interest dipped 343 lots to 218,749.

In the market Friday, December gained 37 points for the day but lost 97 points for the week. It held on a dip just above Thursday’s weekly low, which was the lowest intraday price in 24 sessions, and finished above Thursday’s high.

The inverted December-March spread traded between 15 and 32 points and widened seven points to settle at a 22-point December premium on a volume of 2,433 lots. March-May traded between 68 and 60 points carry and widened eight points to close at a 65-point May premium on 431 lots.

In cash online trading, sales totaled 177 bales on The Seam, up from 44 bales the prior session. Prices averaged 66.85 cents, down from 68.07 cents, reflecting premiums of 14.21 cents over loan repayment rates of 52.64 cents. Offerings were 13,740 bales.

The Cotlook A Index of world prices was unchanged at 77.40 cents, narrowing the premium over the prior-day December futures settlement nine points to 10.49 cents. The index lost 105 points for the week.

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