DTN Cotton Open: Market Jumps, Led by Spot July

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Storms hit areas of the Texas Plains, but left the bulk of the droughty cotton region still needing rain. Growers sold 4,566 bales on The Seam for an average of 62.72 cents per pound.

Cotton futures jumped to strong gains in brisk early dealings Wednesday, led by spot July on a triple-digit advance to a four-session high.

July ticked up 126 points to 85.01 cents, in the upper quarter of its 176-point range from 83.63 to 85.39 cents on a contract volume of 6,294 lots. December gained 89 points to 81 cents, trading within a 140-point range from 79.98 to 81.38 cents on a turnover of 5,170 lots.

On the weather scene, severe thunderstorms packing winds gusting to more than 65 mph and hail up to the size of baseballs hit parts of the Texas High Plains Tuesday evening and night, but the large bulk of the cotton area again got little or no rain as measured by the West Texas Mesonet. Hail turned the ground “as white as snow” in places.

In ICE cotton futures Tuesday, July eked out a tiny gain, bouncing off an 11-session low and a test of what some analysts regard as key support (83.32) as well as a test of its 40-day moving average (83.35).

The inverted July-December straddle traded between 865 and 413 points and narrowed 19 points to settle at a 365-point July premium on a volume of 4,789 lots. December-March traded between an inverted 13 and 29 points and narrowed a point to close at a 20-point December premium on a volume of 1,009 lots.

In cash online trading, 4,566 bales changed hands on The Seam’s grower-to business exchange, bringing an average of 67.72 cents per pound, and 2,908 bales on the business-to-business platform, selling for 68.85 cents a pound. Staples 35 or more accounted for 2,983 bales or 65% of the G2B sales and 2,550 bales or 88% of the B2B sales. All the sales were from the Southwest.

The Cotlook A Index of world values fell 100 points to 92.10 cents, narrowing the premium over the prior-day July futures settlement eight points to 8.40 cents.

In outside markets, Dow Jones Industrial Average futures and S&P futures traded slightly lower as traders assessed the impact of the surge in U.S. bond yields and eyed growing doubts about the U.S.-North Korea summit. U.S. dollar index futures traded up 0.335 to 93.430 after reaching a new high for the year.

West Texas Intermediate crude dropped 25 cents to $71.06 and Brent crude lost 73 cents to $77.70. June gold shed $3.30 to $1,287. July corn was up 0.44%, July soybeans down 0.66% and July Kansas City wheat up 0.64%.

Asian stocks closed lower, down 0.44% in Japan’s Nikkei 225, 0.31% in Hong Kong’s Hang Seng, 0.05% in South Korea’s Kospi and 0.7% in China’s Shanghai Composite. India’s Sensex dipped 0.44%. European stocks traded higher, up 0.11% in Britain’s FTSE 100, 0.2% in Germany’s DAX and 0.03 in France’s CAC 40.

China’s Zhengzhou cotton futures surged higher and prices ended with large gains on the China National Cotton Exchange. India’s MCX cotton futures rose.

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