DTN Cotton Open: Ticks on Mostly Slight Losses

Tight nearby supplies may have helped prevent a deeper slide after two limit-down moves in a row in December. U.S. producer prices rose 0.2% in August.

Cotton futures ticked on mostly slight loses Wednesday, with December trading within the overnight range after slipping overnight to an 11-session low following two limit-down moves in a row.

December hovered off 23 points at 68.87 cents, trading within a 73-point range between 68.47 and 69.20 cents on a contract volume of 6,520 lots. March eased four points to 68.43 cents, trading within a 75-point range between 68.05 and 68.80 cents on a turnover of 1,896 lots. Deferred contracts were flat to higher.

Tight nearby supplies may have helped prevent a deeper following two limit-down moves in December. The big U.S. crop projected by USDA Tuesday is still a long way from “being bagged.” Hurricane Irma and its remnants could hurt both quantity and quality, but beneficial cotton weather for now is bolstering crop prospects on the Texas High Plains.

In the news, U.S. businesses sold goods and services at slightly higher prices in August, though inflation pressures remained weak overall, Dow Jones Newswires reported.

The producer-price index, a measure of inflation experienced by businesses, rose 0.2% in August from a month earlier, the Labor Department said. The increase, while modest, was the biggest since April.

Higher gasoline prices accounted for most of the jump. Excluding food and energy components, so-called core prices increased 0.1%, a meager jump. Economists surveyed by The Wall Street Journal had expected a 0.3% gain in overall producer prices and a 0.2% rise in core prices.

In outside markets, U.S. dollar index futures traded up 0.09% to 91.935, while Dow Jones futures dropped 20 points and S&P futures 4.25 points as North Korea showed defiance over new U.N. sanctions.

Crude oil gained 50 cents to $48.73, Brent crude added 34 cents to $54.61 and December gold rose by $2.80 to $1,332.70. December corn was up 0.64%, November soybeans up 0.45%, December Chicago wheat up 0.9% and December Kansas City wheat up 0.79%.

Asian stocks finished mixed, up 0.45% in Japan’s Nikkei 225, down 0.28% in Hong Kong’s Hang Seng, down 0.22% in South Korea’s Kospi and up 0.18% in China’s Shanghai Composite Index. European shares were mixed, down 0.23% in Britain’s FTSE 100 and up 0.13% in France’s CAC 40.

China’s Zhengzhou cotton futures closed on losses and prices settled mostly lower on the China National Cotton Exchange. India’s MCX cotton futures continued to fall.

No online cash sales were reported on The Seam.

In ICE cotton futures Tuesday, December limit-down finish took it back below its 18-day, 40-day and 50-day moving averages. Monday’s steep closing loss after a limit-down move already had penetrated the nine-day MA, a short-term negative technical signal.

The inverted December-March spread traded between 33 and 74 points and with March also down the limit closed at an unchanged 64-point premium on December on a volume of 5,304 lots. March-May traded between 65 and 28 points carry and widened 30 points to settle at a 59-point May premium on 1,568 lots. May-July widened 48 points to a 42-point July settlement premium on 647 lots.

The Cotlook A Index of world values fell 230 points to 82.10 cents, widening the premium over the prior-day December futures settlement 18 points to 9.99 cents.

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