DTN Cotton Open: Ticks Modestly Lower on Follow-Through Action

March traded below prior-session low. Trend-following funds boost net longs to the largest since June. Cash online sales fell to 12,519 bales on The Seam.

Cotton futures ticked modestly lower in early dealings Monday, with March slipping below the prior-session low on follow-through action.

March hovered off 51 points to 73.21 cents, just off the low of its 66-point range from 73.83 to 73.17 cents on a contract volume of 3,676 lots. May ticked down 54 points to 73.66 cents, trading from 74.17 to 73.63 cents on a turnover of 840 lots.

In outside markets, U.S dollar index futures dipped 0.045 or 0.003% to 93.830 ahead of a Federal Reserve meeting this week, while Dow Jones Industrial Average futures ticked up 39 points and S&P futures 1.50 points. Stock futures had dipped briefly on news of an explosion of unknown origin near Times Square in New York City.

West Texas Intermediate crude oil gained 11 cents to $57.47, Brent crude added 29 cents to $63.69 and February gold ticked up $1 to $1,249.40. March corn was down 0.5%, January soybeans down 0.51%, March Chicago wheat down 0.78% and March Kansas City wheat down 0.72%.

Asian stocks closed higher, up 0.56% in Japan’s Nikkei 225, 1.14% in Hong Kong’s Hang Seng, 0.3% in South Korea’s Kospi and 0.55% in China’s Shanghai Composite Index. India’s Sensex rose 0.2%. European shares were trading up 0.51% in Britain’s FTSE 100, down 0.04% in Germany’s DAX and off 0.15% in France’s CAC 40.

China’s Zhengzhou cotton futures settled on triple-digit gains and prices ended mostly lower on the China National Cotton Exchange. India’s MCX cotton futures were steady after large gains last week.

Meanwhile, trend-following funds boosted their net longs by 9,898 lots to 76,409 lots in ICE cotton futures options combined during the week ended Tuesday, their largest net long position since June 6, according to traders-commitments data reported after the close Friday.

Prices during the reporting week ranged from 71.75 to 73.46 cents, basis March. Index funds shaved their net longs 120 lots to 70,257, the weekly Commodity Futures Trading Commission report showed, while non-reportable traders hiked theirs 183 lots to 3,864.

Commercials sold a net 9,961 lots, adding 10,237 shorts and 276 longs to raise their net shorts to 150,531 lots. Combined open interest expanded 14,161 lots to 297,489.

In futures Friday, March settled modestly lower for the session after reversing off the prior day’s seven-month high by a single point but still finishing up 44 points for the week, its seventh consecutive weekly gain for a total of 659 points.

The March-May spread traded between 58 and 36 points of carry and widened seven points to settle at a 48-point May premium on 5,087 lots. May-July traded between 21 and six points carry and widened a point to close at a 19-point July premium on a 1,631 lots.

Cash online sales fell to 12,519 bales from 23,591 bales on The Seam’s grower-to-business and business-to-business platforms. Prices slipped to an average of 68.64 cents, reflecting a drop to an average of 18.60 cents from 18.92 cents in premiums over loan rates. Loan values fell to an average of 50.04 cents from 50.98 cents. Offerings were 93,765 bales.

The Cotlook A Index of world values gained 150 points to 84.70 cents, narrowing the premium over the prior-day March futures settlement a point to 10.47 cents.

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