DTN Cotton Open: Shows Red in Early Going

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May traded on triple-digit loss below Friday’s low. Hedge funds boosted their net longs 8,625 lots. Cash online sales slowed to 5,069 bales on The Seam.

Cotton futures ticked in the red in early dealings Monday, with spot May trading on a triple-digit loss below the previous-session low.

May hovered down 103 points to 83.49 cents, trading within a 175-point range from 85.03 to 82.28 cents on a contract volume of 3,516 lots. July slipped 76 points to 83.43 cents, trading within a 150-point range from 84.71 to 83.21 cents on 1,469 lots. December dipped 27 points to 78.45 cents, five ticks off the low of its 35-point range on 672 lots.

Meanwhile, trend-following funds boosted their net longs 8,625 lots to 84,835 in ICE cotton futures-options combined during the week ended Tuesday, according to trader-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

They added 8,203 longs and covered 422 shorts for a week in which prices traded from 80.67 to 86.60 cents in May, ending with an 18-point gain for the week at 82.43 cents, and then added a net 209 points the next three sessions.

Index funds hiked their net longs 2,672 lots to 82,729, while non-reportable traders upped theirs 1,290 lots to 7,546. The combined net longs of hedge funds and non-reportable traders — predominantly speculators — increased 9,897 lots to 92,381.

Commercials sold 12,587 lots, adding 11,190 shorts and liquidating 1,397 longs to raise their net shorts to 175,110 lots. Open interest rose by 13,424 lots to 333,323. Commercials’ net shorts were 189.55% of the combined net longs of hedge funds and non-reportable traders, down from 197.04%.

In the market Friday, May settled down 60 points for the day but up 243 points or 2.96% for the week. It established the 489-point range for the week on Tuesday, reversing off the new contract high to finish sharply lower.

The May-July spread traded between an inverted 15 and 70 points and narrowed 24 points to settle at a 33-point May premium on a volume of 4,952 lots. It closed the prior Friday at a 26-point July premium. Inverted July-December narrowed 59 points to close at a 547-point July premium, trading between 538 and 640 points on 3,084 lots. December-March finished at an 8-point March premium from a 15-point December premium on 241 lots.

Cash online sales slowed to 5,069 bales from 13,528 bales on The Seam. Prices fell to an average of 72.41 cents from 76.80 cents, reflecting a drop to an average of 23.83 cents from 26.65 cents in premiums over loan rates. Offerings were 79,147 bales.

The Cotlook A Index of world values gained 220 points to 94.40 cents, narrowing the premium over the prior-day May futures settlement six points to 9.28 cents.

In outside markets, U.S. dollar index futures edged up 0.0.45 to 90.110, while June Dow Jones Industrial Average futures traded up 47 points and June S&P futures up 5.25 points. Stock index futures were building on last week’s strong U.S. monthly jobs data that allayed fears of rising inflation and faster interest rate hikes.

West Texas Intermediate crude oil dropped 49 cents to $61.55 and Brent crude lost 56 cents to $64.93. April gold fell $6.20 to $1,317.80. May corn was down 0.58%, May soybeans off 0.24% and July Kansas City wheat down 1.02%.

Asian stocks closed higher, up 1.65% in Japan’s Nikkei 225, 1.07% in Hong Kong’s Hang Seng, 1% in South Korea’s Kospi and 0.58% in China’s Shanghai Composite. India’s Sensex gained 1.83%. European stocks also were trading higher, up 0.04% in Britain’s FTSE 100, 0.6% in Germany’s DAX and 0.22% in France’s CAC 40.

China’s Zhengzhou cotton futures and prices on the China National Cotton Exchange settled on losses. India’s MCX cotton futures were trading lower.

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