DTN Cotton Close: Skids to Triple-Digit Old-Crop Losses

Photo: Texas AgriLife

Steep Wall Street plunge contributed to losses. U.S. all-cotton 2017-18 export commitments reached 97% of the USDA estimate, but shipments continued to lag. Interest rate raised on CCC commodity loans.

Cotton futures closed mixed Thursday, skidding to skidding to triple-digit losses in May and July and eking out a marginal gain in December.

May closed down 112 points to 81.81 cents, just below the midpoint of its 239-point range, from up 13 points at 83.06 to down 226 points at 80.67 cents. July lost 118 points to settle at 82.11 cents, while December edged up seven points to 77.18 cents.

A steep plunge in U.S. stocks after President Donald Trump said the United States would impose import tariffs on steel and aluminum, adding fears of a trade war to worries about higher interest rates, contributed to the cotton losses along with technical short-term overbought readings.

Volume rose to an estimated 44,700 lots from 34,243 lots the previous session when spreads accounted for 12,836 lots or 37%, EFS 1,081 lots and EFP 104 lots. Options volume declined to 9,026 lots (calls and puts) from 13,386 lots (9,043 calls and 4,343 puts).

Net U.S. all-cotton export sales for shipment this season of 299,500 running bales during the week ended Feb. 22, down from 402,700 RB the prior week, brought 2017-18 commitments to 13.684 million RB.

The lead of commitments — outstanding sales of 7.443 million RB plus shipments — over cumulative sales a year ago narrowed 190,000 RB to 2.175 million RB or to 19%. Sales were 97% of the USDA estimate, compared with 80% of final 2016-17 shipments at the corresponding point last season.

Sales for delivery next season of 118,200 RB, down from 177,200 RB the prior week, lifted 2018-19 commitments to 2.156 million RB, widening the lead over forward bookings a year ago by 55,000 RB to 1.094 million.

New-crop commitments stand at 14% of the initial USDA forecast released at its Agricultural Outlook Forum, compared with forward sales a year ago of 8% of the current 2017-18 estimate.

All-cotton shipments slowed to 290,800 RB from 354,700 RB the week before, bringing exports for the season to 6.012 million RB. The lag behind exports a year ago widened 36,000 RB to 567,000, about 9%. Exports were about 43% of the estimate, against 45% of final shipments a year ago.

To achieve the estimate, shipments need to average roughly 366,100 RB a week for the 22 weeks remaining in the marketing year, while total sales are within approximately 381,000 RB of matching the export forecast.

Some analysts expect USDA to raise its 2017-18 export estimate in next week’s supply-demand report, but others maintain that weekly shipments would need to quicken substantially to warrant an increase.

The USDA cut its export estimate 300,000 statistical bales last month to 14.5 million, citing lagging shipments. Exports still would rank as the third largest on record behind 14.92 million SB last season and 17.67 million RB in 2005-06.

Meanwhile, USDA’s Commodity Credit Corp. announced that the borrowing rate-based charge for March is 1.875%, up from 1.750% in February. The interest rate for crop year commodity loans less than one year disbursed during March is 2.875%, up from 2.750% last month.

Futures open interest expanded 3,017 lots to 282,555 on Wednesday, with March’s down 22 lots to 92 and May’s up 921 lots to 129,824. Certified stocks grew 641 bales to 104,281. Awaiting review were 399 bales at Galveston.

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