DTN Cotton Close: Finishes on Triple-Digit Old-Crop Gains

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May closed highest since Feb. 1. U.S. upland classing reached 18.48 million RB, up 17% from a year ago and 92% of the USDA production estimate. Crop size debated.

Cotton futures settled on triple-digit old-crop gains Tuesday, with most-active May finishing on its highest close since Feb. 1.

May gained 180 points to settle at 78.96 cents, in the upper third of its 278-point range from down 20 points at 76.96 cents to up 258 points at 79.74 cents. It surged through highs of the prior two weeks and closed on its largest one-day point gain since Jan. 11, back above its nine-day and 18-day moving averages.

March, with one trading day left before first notice day, settled up 179 points to 77.51 cents and July closed up 159 points to 79.71 cents. The other contracts finished on gains of 20 to 63 points, with December up 38 points to 76 cents.

The market rallied from a shallow overnight dip, underpinned by scale mill fixations, amid oversold technical readings, slower speculative selling reported after the close Friday and some short covering. The March discount to May has neared full carrying charges.

Volume increased to an estimated 54,200 lots from 28,089 lots the previous session when spreads accounted for 17,472 lots or 62%, EFP 785 lots and EFS 337 lots. Options volume dipped to 6,093 lots (3,240 calls and 2,853 puts) from 6,344 lots (5,399 calls and 945 puts).

U.S. upland classing slowed to 236,832 running bales last week from 324,825 RB the previous week, according to tabulations by USDA’s Agricultural Marketing Service. Analysts debated whether the crop will reach the production estimate.

Classing for the season rose to 18.48 million RB, up 17% from 15.811 million RB graded a year ago and roughly 92% of the USDA upland production estimate. A year ago, around 98% of the final upland output had been classed.

Tenderable cotton accounted for 44.4% of the classing run for the week and 68.6% for the season, compared with 50.9% and 68.9%, respectively, the prior week. Seventy percent graded a year ago met tenderable requirements. Gins submitting upland samples for grading declined to 130 from 180 the week before and 534 for the season.

Classing of 22,103 RB of Pima, up from 17,708 RB the previous week, raised the extra-long staple count for the season to 651,020 RB, up 25% from 520,653 graded a year ago.

All-cotton classing of 19.13 million RB totaled around 93% of the crop estimate and left something like 1.495 million RB still to be graded to achieve the forecast. End-of-season ginning figures, with an estimate of cotton left to be ginned, will be reported by USDA on March 8 and reviewed in the annual summary on May 10.

The two Texas High Plains classing offices graded 110,350 RB last week, including 85,749 at Lubbock and 24,601 at Lamesa, and the Abilene facility classed an additional 80,694 RB from the Texas Rolling Plains, Oklahoma and Kansas.

That represented 81% of the U.S. upland classing for the week and hiked the season’s total in the Southwest to 9.192 million RB, roughly 90% of the upland crop forecast for the region.

Most modules on the High Plains have been delivered to gin yards. The Lubbock classing facility reported that around 70% of the gins in its territory have completed operations for the season. Similar progress was reported at Lamesa. The Abilene office continued operating three shifts.

There were 39 gins still operating in the territory served by the Abilene office, 34 in the Lubbock region and 13 in the Lamesa area.

Futures open interest declined 4,375 lots to 254,694 on Friday, smallest since Dec. 13, with March’s down 5,937 lots to 13,204 and May’s up 999 lots to 120,414. Certified stocks were unchanged at 92,923 bales.

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