DTN Cotton Open: Trades on Strong Gains After Long Weekend

Rolls of cotton module fabric. ©Debra L Ferguson Stock Images

May posted five-session high. Selling by trend-following funds slowed to a net 12,580 lots, reducing their net longs 57.8% from the record high of Jan. 23. Cash online sales slowed to 3,211 bales Monday while futures were closed.

Cotton futures ticked on strong gains in early dealings Tuesday following a long holiday weekend, with most-active May rising above highs of the previous four sessions.

Most-active May hovered up 96 points to 78.12 cents, a tick off the high of its 117-point trading range from 76.96 to 78.13 cents on a contract volume of 5,068 lots. March gained 101 points to 76.73 cents, trading within a 114-point range from 75.60 to 76.74 cents on a turnover of 1,578 lots.


Meanwhile, selling by trend-following funds slowed to a net 12,580 lots in cotton futures options-combined during the week ended Tuesday from 16,480 lots the prior-week, reducing their net longs to 66,524 lots, data reported by the Commodity Futures Trading Commission showed.

Their long liquidation selling for three consecutive weeks has cut their net longs 48,596 lots or 57.8% from the record high of Jan. 23. They liquidated 14,206 longs and covered 1,625 shorts during the latest reporting week, while index funds reduced their net longs 3,618 lots to 77,971 and non-reportable traders shaved theirs 174 lots to 5,981.

Commercials bought a net 9,136 lots, covering 23,739 shorts and liquidating 14,603 longs to shave their net shorts to 150,475 lots. Open interest declined 63,212 lots to 321,779.

In futures only, non-commercials sold a net 239 lots, liquidating 9,718 longs and covering 9,479 shorts to nudge their net longs down 239 lots to 84,692. They were net long 31.7% of the open interest, up from 29%. Open interest fell 26,923 lots to 266,641.

In the market Friday, May settled slightly higher for the day, snapping a string of four consecutive losses, but down modestly for the week. It completed an inside day after closing Thursday at its lowest finish since Dec. 20.

The March-May spread traded between 144 and 132 points carry and widened eight points to settle at a 144-point May premium on a volume of 7,221 lots. May-July traded between 103 and 95 points carry and narrowed three points to close at a 96-point July premium on 1,674 lots.

Inverted July-December widened 23 points to settle at a 250-point July premium, trading between 221 and 261 points on 987 lots.

In cash online trading Monday while ICE futures were closed, sales slowed to 3,211 bales from 5,415 bales. Prices averaged 63.56 cents, down from 69.38 cents on Friday, with premiums over loan rates falling to an average of 17.37 cents from 19.28 cents. Loan values averaged 46.19 cents, down from 50.10 cents. Offerings were 159,625 bales.

Grower-to-business sales of 2,896 bales brought an average of 62.53 cents per pound, while business sales of 315 bales went for an average of 73.02 cents. The G2B sales included 2,793 bales from the Southwest and 103 bales from the West. All the B2B sales were from the Southwest. Staples 35 or more accounted for 2,896 bales of 70% of the grower sales and 311 bales or 99% of the business sales.

The Cotlook A Index of world values dropped gained 25 points to 86.85 cents, narrowing the premium 14 points over Friday’s May futures settlement.

In outside markets, U.S. dollar index futures traded up 0.625 to 89.640 after touching a three-year low on Friday, while Dow Jones Industrial Average futures dropped 165 points and S&P futures 15.50 points as bond yields rose.

Oil prices were mixed, with West Texas Intermediate crude oil for April up 14 cents to $61.69 and Brent crude down 62 cents to $65.05. April gold fell $$15.50 to $1,340.80. March corn was up 0.41%, March soybeans up 1.25%, March Chicago wheat up 0.71% and March Kansas City wheat up 0.31%.

Asian stocks closed lower, down 1.01% in Japan’s Nikkei 225, 0.78% in Hong Kong’s Hang Seng and 1.13% in South Korea’s Kospi. India’s Sensex dipped 0.21%. European shares traded mixed, down 0.26% in Britain’s FTSE 100, up 0.1% in Germany’s DAX and up 0.13% in France’s CAC 40.

China’s markets, including cotton, remained closed for the Lunar New Year holidays. India’s MCX cotton futures were on the plus side.

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