DTN Cotton Open: Trades Mixed in Early Going

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A chance for showers and thunderstorms forecast for the Texas Plains later this week. Trend-following funds returned to the buy side, raising their net longs 1,144 lots, after three straight weeks as sellers. Cash online sales quickened to 14,450 bales on The Seam.

Cotton futures ticked mixed in early dealings Monday as traders kept an eye on chances for rain later this week in the Texas Plains.

Most-active July dipped 12 points to 83.23 cents, trading within a 57-point between 83.04 and 83.61 cents on a contract volume of 4,139 lots. Soon-to-mature May edged up six points to 83.47 cents, trading within a 76-point range between 83.25 and 84.01 cents on a turnover of 2,199 lots. December dropped 39 points to 78.52 cents, below the prior-session low within a 56-point range between 78.38 cents on 1,063 lots.

A chance for showers and thunderstorms is forecast for Thursday and Friday on the Texas High Plains around Lubbock. Gusty winds and temperatures 10-12 degrees above normal are forecast for today.

Meanwhile, trend-following funds returned to the net buy side in cotton futures-options combined during the week ended Tuesday, boosting their net longs 1,144 lots to 77,379 after three straight weeks as long liquidation sellers, according to traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

They added 1,870 longs and 726 shorts. Prices during the reporting week ranged from 78.62 to 83.69 cents and finished at 83.53 cents, basis May. This was during the U.S.-China trade war scare. Index funds raised their net longs 1,079 lots to 79,782, while non-reportable traders shaved theirs 468 lots to 7,577.

Commercials boosted their net shorts 1,750 lots to 164,740, adding 3,757 shorts and 3,757 longs. Open interest rose by 924 lots to 348,033, the fourth consecutive reporting week increase.

In cotton futures Friday, May settled with a slight loss for the day but up 87 points for the week as May options expired. After today, there will be five trading sessions until first notice day. Scheduled index fund rolling of longs from May ended Thursday.

The May-July switch traded from an inverted 91 to four points and narrowed 63 points to settle at a six-point May premium on a volume of 19,527 lots. The inverted July-December straddle traded between 420 and 471 points and widened 27 points to close at a 444-point July premium on 3,013 lots. December-March’s settlement difference narrowed four points to a 12-point March premium on 208 lots.

In cash online trading, sales quickened to 14,450 bales from 6,790 bales on The Seam. Prices rose to an average of 73.27 cents from 67.22 cents, reflecting gains to 23.24 cents from 18.63 cents in premiums over loan rates. Offerings were 87,570 bales.

The Cotlook A Index of world values dipped 10 points to 92.95 cents, widening the premium over the prior-day May futures settlement four points to 9.26 cents.

In outside markets, Dow Jones Industrial Average futures gained 1.62 points and S&P futures 16.25 points amid bets that the weekend’s U.S. attack on Syria would not escalate. U.S. dollar index futures dropped 0.263 to 89.240.

June West Texas Intermediate crude oil dropped 70 cents to $66.63 and Brent crude lost 80 cents to $71.78. June gold inched up $1 to $1,348.90. July corn was down 0.32%, July soybeans up 0.26% and July Kansas City wheat down 2.04%.

Asian stocks closed mixed, up 0.26% in Japan’s Nikkei 0.26%, down 1.6% in South Korea’s Kospi, up 0.1% in South Korea’s Kospi and down 1.5% in China’s Shanghai Composite. European shares were trading lower, down 0.51% in Britain’s FTSE 100, 0.11% in Germany’s DAX and 0.12% in France’s CAC 40.

China’s Zhengzhou cotton futures settled with mostly small gains and prices ended mostly higher on the China National Cotton Exchange. India’s MCX cotton futures were rising.

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