DTN Cotton Close: Surges to New Contract Highs

Image from Texas AgriLife Extensions

Cotton expected to benefit from easing of U.S.-China trade tensions. Heat stress reported in some South Texas cotton. Up to 5 inches of rain reported in the Texas Rolling Plains. Planting advanced rapidly in the Southeast and made excellent progress in the Delta. Pima cotton made normal progress in the Far West.

Cotton futures surged to new contract highs by early Monday morning and finished near the day’s top prices, led by spot July as news of China’s pledge to import more American goods appeared to have triggered short covering and fresh fund buying.

July gained 187 points to settle at 88.42 cents, trading within a 163-point range from up 55 points at 87.10 cents to a new contract high at 88.73 cents. December advanced 173 points to settle at 84.16 cents, trading within a 219-point range from the opening low overnight at 82.70 cents to 84.89 cents, its third new contract high in a row.

Cotton would be one of the commodities expected to benefit from the easing of U.S.-China trade tensions. Bad weather has damaged cotton in China’s major Xinjiang producing region and there have been significant reductions in China’s reserve stocks in recent years. China is the second largest export buyer of U.S. cotton behind Vietnam this season and also was the second largest destination the prior year.

Volume rose to an estimated 51,200 lots from 43,716 lots the previous session when spreads accounted for 16,081 lots or 37% and EFS 1,054 lots. Options volume dipped to 22,312 lots (11,112 calls and 11,200 puts) from 28,325 lots (17,365 calls and 10,960 puts).

On the crop scene, some cotton exhibited heat stress in South Texas during the week ended Thursday, a weekly review by USDA’s Agricultural Service reported Friday. Stands were irrigated.

Drought had impacted dryland cotton in Willacy County, leaving some fields fallow and others failing to establish stands, according to the Texas A&M Extension Pest Cast. Integrated Pest Management specialists helped producers manage fleahopper, aphid, red spider mite, white fly and thrips populations in the Coastal Bend, Upper Coast and Rio Grande Valley. They monitored for bollworms and Bt resistance in parts of Texas.

Fields were soggy in the Blackland Prairies and delayed replanting. Some areas had received 6 inches of rainfall. Stands had emerged and needed dry, sunny conditions to advance. Planting neared completion.

Scattered thunderstorms brought rain, hail and gusty winds to cotton areas of the West Texas Plains. Estelline in Hall County in the northern Rolling Plains northeast of Lubbock and some other areas got a total of up to 5 inches of rain and severe hail. Planting expanded as conditions allowed. Fields were irrigated and some cotton had emerged. Dry, windy conditions prevailed much of the week.

Planting advanced rapidly in the Southeast under mostly sunny skies early in the period. Producers welcomed widespread showers later in the week in the Lower Southeast where 0.50-inch to an inch fell in localized areas throughout Alabama, the Florida Panhandle and Central Georgia. Heavier accumulations of up to 2 inches fell along the Atlantic coastal areas of Georgia.

Producers in Alabama had begun irrigating emerging cotton in areas that had missed the rainfall. In Georgia, the beneficial moisture will allow dryland farmers to resume planting where soils had become hard and dry. Some fields will have to be replanted where moisture arrived too late and also in some earlier-planted fields where cool soils hindered good plant populations at germination.

Hot, dry conditions early in the period slowed planting in some areas of the Carolinas where soil moisture deteriorated and producers waited for rainfall. Reports indicated irrigation was used every day where available. Later in the week, showers brought a quarter to half an inch of welcome moisture to some areas of the Carolinas and Virginia and wet weather in the near-term forecast was expected to idle planters.

Producers made excellent planting progress in the Delta. A late-week storm front brought up to an inch of rain generally and idled outdoor activities until fields firmed enough to support equipment.

The Pima crop advanced normally in the Far West, with little to no insect pressure reported. Planting was completed. Sources in El Paso said there was a slight increase in Pima acreage as more irrigation water became available and was released to growers.

Certified stocks increased 296 bales to 79,686 on Friday, according to the daily ICE report. Open interest rose by 2,728 lots to 290,042, with July’s down 977 lots to 129,164 and December’s up 1,717 lots to 122,476.

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