DTN Cotton Open: Ticks Mixed As May Edges Higher

Stock futures added to rebound amid easing of trade war fears. Texas cotton crop 8% planted, up from the five-year average of 2%. Cash online sales slowed to 2,454 bales on The Seam.

Cotton futures traded mixed in early dealings Tuesday, with May edging up slightly on subdued, inside-range price action and December posting a small loss.

May hovered up 19 points to 81.97 cents, trading within an 83-point range from 82.55 to 81.72 cents on a contract volume of 2,687 lots after getting within two ticks of Monday’s high.

July also inched up 19 points to 82.41 cents, moving within a 76-point range between 82.92 and 82.16 cents on a turnover of 892 lots. December eased off 11 points to 77.59 cents, trading within a 41-point span from 77.92 to 77.32 cents on 311 lots.

Meanwhile, producers in Texas had planted 8% of their expected 2018 cotton acreage as of Sunday, up from 3% last year and 2% for the five-year average, USDA’s crop progress report showed after the close Monday.

The state received little to no rain last week, with the Trans-Pecos registering the highest amount at less than 0.5 of an inch. Extreme drought continued in the Plains, while many areas of the western, southern and central parts of the state were between moderate and severe drought.

Lack of moisture slowed field work in the Plains; cotton planting continued in the South Texas, Lower Rio Grande Valley, Upper Coast and Coastal Bend districts. The lower valley is the perennial source of the nation’s first new-crop cotton.

In ICE cotton futures Monday, May settled fractionally lower, its fourth straight loss, after nudging above the prior-session high earlier in the day. Index funds are scheduled to begin rolling longs from May this week. Those along with those hedge fund and speculator rolls will extend into the second week of April. December managed a marginal gain, and yet its nine-day moving average crossed below the 18-day MA.

The May-July spread traded between 45 and 25 points carry and widened five points to settle at a 44-point July premium on a volume of 8,527 lots. Inverted July-December traded from 444 to 510 points and narrowed four points to close at a 452-point July premium on 1,277 lots. December-March’s settlement difference narrowed a point to 18 points of carry.

Cash online sales slowed to 2,454 bales from 4,977 bales on The Seam. Prices averaged 76.34 cents, up from 63.58 cents, reflecting average premiums over loan rates of 2514 cents, up from 20.22 cents. Offerings were 96,435 bales.

Grower-to-business sales of 1,937 bales brought an average of 76.42 cents per pound, while business-to-business sales of 517 bales brought an average of 76.03 cents. Staples 35 or more accounted for 1,677 bales or 87% of the G2B sales and 503 bales of 97% of the B2B sales. All the sales were from the Southwest.

The Cotlook A Index of world values dropped 50 points to 91.05 cents, narrowing the premium over the prior-session May futures settlement 18 points to 9.22 cents.

In outside markets, Dow Jones Industrial Average futures traded up 117 points and S&P futures up 11.25 points, adding to Wall Street’s sharp rebound on Monday, as fears of a trade war between the United States and China eased. U.S. dollar index futures ticked up 0.555 to 89.160.

West Texas Intermediate crude oil gained 73 cents to $66.28 and Brent Crude added 71 cents to $70.83 amid concerns that tensions in the Middle East could lead to supply disruptions. April gold lost $13.20 to $1,341.80. May corn was up 0.53%, May soybeans up 0.17% and July Kansas City wheat flat.

Asian stocks closed higher, up 2.65% in Japan’s Nikkei 225, 0.79% in Hong Kong’s Hang Seng, 0.61% in South Korea’s Kospi and 1.04% in China’s Shanghai Composite. India’s Sensex gained 0.33%. European shares traded higher, up 1.92% in Britain’s FTSE 100, 1.7% in Germany’s DAX and 1.34% in France’s CAC 40.

China’s Zhengzhou cotton futures closed with gains and prices ended mostly up on the China National Cotton Exchange. India’s MCX cotton futures rose.

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