DTN Cotton Close: Meanders to Mixed Finish

Herbicide Application. ©Debra L Ferguson Stock Photography

Mills boosted total unpriced on-call sales to 15.635 million bales, second highest on record. U.S. competitive price position showed little change in the Far East.

Cotton futures meandered largely within trading ranges established by early morning and finished a lightly traded session mixed Friday.

May dropped 68 points to close at 82.85 cents, its lowest settlement since March 6 and down 167 points for the week. It finished around the lower third of its 128-point range from up 17 points at 83.70 to down 111 points at 82.42 cents. May has made five lower highs in a row.

July closed down 62 points to 82.98 cents, trading within a 118-point range from 83.75 to 82.57 cents, while December edged up nine points to settle at 78.28 cents, a couple of ticks off the high of its 61-point range. For the week, July shed 121 points and December dipped 44 points.

Volume declined to an estimated 18,300 lots from 21,372 lots the previous session when spreads accounted for 8,130 lots or 38%, EFP 45 lots and EFS 50 lots. Options volume nudged up to 3,611 lots (1,595 calls and 2,016 puts) from 3,544 lots (2,640 calls and 904 puts).

Mills boosted their total unpriced on-call sales by 6,586 lots (658,600 bales) to 156,353 lots (15.635 million bales) last week, according to data reported by the Commodity Futures Trading Commission after the close Thursday.

That’s their second highest unfixed position on record behind the all-time high of 158,195 lots set on Jan. 19. Producers added 260 lots (26,000 bales) to raise their unpriced position to 38,880 lots (3.888 million bales).

The net call difference increased 6,326 lots to 117,473, which was 43.4% of the rising open interest, up from 41.77%. Mills had around four contracts to buy for every one that producers had to sell.

In spot May, mills priced or rolled 1,039 lots to drop their unfixed position to 31,952 lots, producers shaved theirs 617 lots to 3,127 and the net call difference fell 422 lots to 28,825, 22.3% of May’s declining open interest.

On the competitive-pricing front, the average of the five lowest-priced world growths for the Far East gained 99 points to 92.17 cents for the week ended Thursday, according to USDA calculations, while the lowest-quoted U.S. cotton landed there gained 100 points to 92.35 cents.

The premium for U.S. cotton thus showed little change, edging up a single tick to 18 points. The adjusted world price for the program week ahead is 75.12 cents, which of course leaves the marketing loan gain at zero.

The fine count adjustment for 2017-crop qualities better than 31-3-35 is 1.02 cents, up from 86 points this week. This adjustment can further reduce the AWP to reflect differences in premiums in U.S. and international markets.

Futures open interest grew 989 lots to 272,833 on Thursday, with May’s up 356 lots to 126,255, July’s up 516 lots to 59,047 and December’s down 96 lots to 70,156. Certified stocks declined 2,398 bales to 76,795 on decertification of 2,480 bales and the addition of 82 bales.

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