DTN Cotton Close: Mostly Higher in Listless Trade

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Fed kept December rate rise on the table and announced it would initiate its plan to shrink its bond portfolio in October. Some cotton harvested in the South Delta before Hurricane Irma remnants moved through.

Cotton futures traded listlessly on thin volume to mostly slightly higher settlements Wednesday, with December completing another inside day little changed.

December settled down two points to 69.25 cents, in the lower third of its tight 68-point range from up 46 points at 69.73 to down 22 points at 69.05 cents. It was the only contract to close below unchanged.

March finished up 21 points to 68.51 cents, around the middle of a 54-point range from 68.75 to 68.21 cents. Thin October, where first notice day arrives Monday, settled up six points to 70.04 cents. It traded within a 147-point span from 71.11 to 69.64 on a volume of 38 lots.

The Federal Reserve announced it would initiate in October its long-telegraphed plan to shrink the portfolio of bonds acquired after the 2008 crisis, and kept alive the possibility of raising rates by December, Dow Jones Newswires reported.

The Fed left rates unchanged and hinted it could raise rates again in 2017 even though persistently low inflation has given some officials second thoughts about a move by then.

U.S. dollar index futures initially ticked upward on the announcement, U.S. stocks edged slightly lower and government bonds fell.

Cotton volume dwindled to an estimated 10,514 lots from 16,786 lots the prior session when spreads accounted for 5,405 lots or 32%, EFP 79 lots and EFS 64 lots. Options volume rose to 5,01 lots (4,505 calls and 536 puts) from 2,916 lots (943 calls and 1,973 puts).

On the crop scene, producers harvested some cotton in the South Delta before remnants of Hurricane Irma moved through and deposited up to 2 inches of unnecessary moisture last week.

Yields of 1,100 to 1,400 pounds per acre were reported, according to USDA’s latest regional weekly summary. Yield reductions were expected in the wettest fields. Ginning had begun on a limited basis in Mississippi.

Many fields in the North Delta were saturated after Irma’s remnants brought moderate winds and up to 2 inches of rain. No serious damage was reported to structures or standing crops.

Producers were hoping for warm, dry weather for late-planted fields to mature fully and to allow defoliation of early-planted fields to resume. Growers were concerned about the possibility of boll lock as a result of the recent rainfall.

In the West, ginning continued uninterrupted at Yuma and defoliation activities advanced in Central Arizona. Ginning was expected to begin there around early October. A few modules were on gin yards. Three Central Arizona gins installed new automated bale bagging systems, one of which is a no-strap version.

No cotton crop damage was reported in California’s San Joaquin Valley from strong straight-line winds. Almond orchards and cornfields were damaged, including a cottonseed barn and several poultry houses. Boll opening at 30% as of Sunday was behind the five-year average of 57%.

Futures open interest declined 913 lots to 238,750 on Tuesday, with October’s down nine lots to 142, December’s down 1,508 lots to 137,548 and March’s up 389 lots to 71,402. Stocks in deliverable position were unchanged at 2,414 bales (24 lots).

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