DTN Cotton Close: Falls to 2nd Day of Heavy Losses

Concerns about possible cancellations of U.S. sales to China pounded futures. High abandonment in Texas termed fairly common. First bale harvested in Rio Grande Valley. Lower Southeast producers planted additional cotton. Delta cotton made good to excellent progress.

Cotton futures fell to a second day of heavy closing losses Monday, with July losing its premium over December and the new-crop contract finishing on its lowest settlement since May 25.

December lost 208 points to close at 87.77 cents, in the lower third of its 242-point range from down 33 points at 89.52 to down 275 points at 87.10 cents. It remained within the range established in the early minutes of Sunday night trading.

July shed 340 points to settle at 87.32 cents, in the lower quarter of its 375-point range from down 17 points at 90.55 to down 392 points — near the 400-point daily limit — at 86.80 cents. It has lost 609 points or 3.8% in two days and closed 45 points below December.

Volume slowed to an estimated 45,800 lots from 70,350 lots the previous session when spreads accounted for 26,568 lots or 38%, EFS 6,112 lots and EFP 167 lots. Options volume slid to 8,790 lots (2,824 calls and 5,966 puts) from 24,056 lots (13,768 calls and 10,288 puts).

Concerns about possible China cancellations of some outstanding U.S. export sales to the world’s largest cotton consumer pounded futures. China quickly announced 25% tariffs on an array of U.S. crops — including cotton — and products to take effect July 6 in response to earlier tariffs announced by President Donald Trump on Chinese goods.

China as of June 7 had booked the largest volume U.S. cotton for shipment next season of any country — 1.45 million statistical bales — and was the second largest buyer for this season on purchases of 2.745 million bales, of which 464,000 bales remained to be shipped.

On the crop scene, abandonment in Texas has remained a subject of much conjecture following beneficial rains in various areas of the Lone Star state last week and more widespread weekend showers and thunderstorms in the Texas Plains.

John Robinson, cotton marketing specialist at Texas A&M, has pointed out that high abandonment in the West Texas Plains is fairly common. Federal crop insurance deadlines have expired on the High Plains and will expire Wednesday in the adjoining Rolling Plains.

“Half the time over the last 12 years we have seen in Texas at least one in three planted acres not being harvested,” Robinson said.

Some cotton in the more heavily irrigated northern High Plains that escaped earlier hail damage has been reported flourishing, while recent rains have been too late to help some dryland fields.

Mary Jane Buerkle, communications director of the Lubbock-based Plains Cotton Growers, Inc., noted in the weekly PCG newsletter that the variable crop situation continues to illustrate that there’s really no such thing as a “typical year” in cotton production in the High Plains.

Elsewhere, fields in the Rio Grande Valley were reported in full bloom and setting bolls last week. The area got some much needed rain, but it was too late to help some stands that already had reached cutout.

Wesley Vanderpool delivered the first bale of U.S. 2018-crop cotton, picked in Hildago County, to the Willacy Cooperative Gin in Sebastian. The bale will be auctioned on Sept. 13 and proceeds used for scholarship funds for students at Texas State Technical College.

Encouraged by strong futures prices, producers in the Lower Southeast were reported pulling some land from competing crops for additional cotton. Planting of cotton continued beyond the normal planting window but overall was completed in most areas.

Cotton made excellent progress in the under favorable weather in the South Delta. More rain was needed on dryland cotton. Good crop progress was reported in the North Delta where squaring advanced rapidly.

Certified stocks declined 186 bales to 82,099 on Friday, the daily ICE report showed. There were 263 bales decertified and 77 newly certified bales. Open interest fell 18,209 lots to 291,083, with July’s down 17,465 lots to 21,960 and December’s down 1,202 lots to 197,234.

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