DTN Cotton Open: Ticks Higher as Traders Digest Data

U.S. producers intend to plant 13.078 million acres of cotton in 2018, up 3.7% from last year, NCC reported. Trend-following funds reduced their net longs 16.482 lots. Cash online sales slowed to 7,064 bales on The Seam.

Cotton futures ticked higher in early dealings Monday as traders digested results of a U.S. planting intentions report and traders-commitments data reported after the prior-session close.

March hovered up 46 points to 77.14 cents, trading within a 104-point range from 74.63 to 77.47 cents on a contract volume of 3,871 lots. May gained 34 points to 77.97 cents, trading within a 94-point range from 77.38 to 78.32 cents on a turnover of 4,286 lots.

Producers intend to plant 13.078 million acres of cotton this spring, up 3.7% from last year, the National Cotton Council reported Saturday at its annual meeting in Fort Worth.

The 37th annual survey showed upland intentions of 12.824 million acres, up 3.8% from 12.36 million in 2017, and 254,000 acres of Pima or extra-long staple cotton, up 1% from 252,000.

The all-cotton intentions came in below some other estimates. A Bloomberg survey showed expectations of about 13.2 million acres.

With abandonment assumed at approximately 15%, the harvested area off the NCC intentions would be 11.1 million acres, Jody Campiche, vice president for economics and policy analysis, said in a report.

And an average yield of 842 pounds per harvested acre would generate a crop of 19.4 million bales — 18.7 million of upland and 744,000 of Pima. Those would compare with USDA’s latest estimates for the 2017 crop of 899 pounds and 21.26 million bales, including 18.062 million bales of upland and 626,500 of Pima.

If drought conditions persist across the Cotton Belt, further reductions in the 2018 production estimate may be necessary, Campiche said. The NCC survey was mailed to producers across the 17-state Cotton Belt in mid-December and responses were collected through mid-January.


Meanwhile, trend-following funds sold 16,482 lots during the week ended Tuesday, liquidating 15,770 longs and adding 710 shorts to cut their net longs 16,482 lots to 95,586 lots in ICE cotton futures-options combined, data showed after the close Friday.

Index funds increased their net longs 924 lots to 74,352, according to supplemental traders-commitments data reported by the Commodity Futures Trading Commission, while traders with non-reportable positions raised theirs 1,818 lots to 6,154.

Commercials bought 13,739 lots, covering 12,170 shorts and adding 569 longs to reduce their net shorts to 159,611 lots. Open interest fell 14,241 lots to 384,991.

In futures only, non-commercials sold a net 13,686 lots, liquidating 16,098 longs and covering 2,412 shorts to reduce their net longs to 84,931 lots. They were net long 29%, down from 32%. Open interest dropped 14,826 lots to 293,564.

In the market Friday, December closed fractionally higher for the day but down 62 points for the week, its third losing week in a row for a total of 8.1%. It closed on its lowest weekly finish since mid-December.

Cash online sales slowed to 7,064 bales from 14,166 bales on The Seam. Prices rose to an average of 71.01 cents from 69.48 cents, reflecting gains to an average of 20.56 cents from 19.76 cents in premiums over loan rates. Loan values averaged 50.46 cents, up from 49.72 cents.

The Cotlook A Index of world values gained 70 points to 87.40 cents, widening the premium over the prior-day March futures settlement four points to 10.78 cents.

In outside markets, U.S. dollar index futures ticked up 0.065 to 90.270 Monday morning, while Dow Jones Industrial Average futures traded up 210 points and S&P futures up 23.50 points after Wall Street’s worst week in two years.

West Texas Intermediate crude futures gained $1.01 to $60.21 and Brent crude added 93 cents to $63.72. April gold gained $4.90 to $1,318. March corn was up 0.83, March soybeans up 1.4%, March Chicago wheat up 1.39% and March Kansas City wheat up 1.29%.

Asian stocks closed mostly lower, with Japan’s Nikkei 225 shut on holiday, down 0.16% in Hong Kong’s Hang Seng, down 0.91% in South Korea’s Kospi and up 0.71% in China’s Shanghai Composite Index. India’s Sensex was up 0.87%. European stocks were trading higher, up 1.27% in Britain’s FTSE 100, 1.75% in Germany’s DAX and 1.44% in France’s CAC 40.

China’s Zhengzhou cotton futures settled with losses and prices closed mostly higher on the China National Cotton Exchange. India’s MCX cotton futures moved lowere and S-6 prices were firm.

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