DTN Cotton Open: Plunges as Much as Daily Limit

©Debra L Ferguson Stock Photography

U.S.-China trade dispute intensifies. U.S. crop ratings continued to deteriorate, with good to excellent falling four percentage points to 38%. Cash grower sales of 873 bales brought an average of 52.44 cents per pound on The Seam. Spot market quotes rolled to October.

Cotton futures fell to a third day of steep losses in early dealings Tuesday, with new-crop December, March and May down the 400-point daily limit.

December was down 4.56% at 83.77 cents, giving up a 53-point gain to 88.30 cents in early overnight trading to trade on the limit loss on a heavy contract volume for this time of day of 17,697 lots. July shed 295 points to 84.37 cents, trading within a 405-point range from 88.15 to 84.10 cents on a turnover of 2,909 lots.

On the crop scene, U.S. ratings continued to deteriorate during the week ended Sunday, with good to excellent falling four percentage points to 38% and poor to very poor rising five points to 26%, the USDA’s weekly report showed after the close Monday.

Conditions a year ago were rated 61% good to excellent and 10% poor to very poor. The DTN cotton condition index, based on the USDA report, fell 15 points from a week ago to 86, down from 158 last year.

Planting advanced six points to 96% completed, slightly ahead of 94% last year and the five-year average. Twenty-two percent was squaring, up from 15% the week before, 21% last year and 17% on average.

The Texas crop was 95% planted, up from 91% last year and 92% on average, and 18% was squaring, up from 17% and 13%, respectively. Conditions deteriorated sharply as good-excellent fell seven points to 19% and poor-very poor rose eight points to 39%.

Crop ratings improved in Arizona, Arkansas, Georgia, Kansas, Mississippi, North Carolina and South Carolina, held steady in Missouri and declined in the remaining reporting states.

In ICE cotton futures Monday, December fell sharply for a second day amid escalating U.S.-China trade tensions, finishing down 705 points or 7.4%from the contract high on June 8.

The July-December straddle traded from an inverted 190 points to 135 points carry and lost 132 points to close at a 45-point December premium on a volume of 5,906 lots. December-March traded between an inverted four and 17 points and narrowed two points to settle at a seven-point December premium on 4,672 lots.

Cash grower-to-business sales of 873 bales and business-to-business sales of six bales brought averages of 52.44 and 73 cents per pound. Staples 35 or more accounted for 804 bales or 92% of the grower sales and all the business sales. All the sales were from the Southwest. Offerings were 26,675 bales.

Spot market quotes on the base quality were rolled from July to October at even in the Southeast, 150 points off in the Delta, 541 off in East Texas-Oklahoma, 591 off in West Texas, 575 off in the Desert Southwest and 525 off in the San Joaquin Valley.

The 2017-18 Cotlook A Index of world values fell 260 points to 98.85 cents, widening the premium over the prior-day July futures settlement nine points to 8.13 cents.

In outside markets, global stocks fell heavily after President Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese goods and Beijing said it would fight back with “qualitative” and “quantitative” measures. Dow Jones Industrial Average futures traded down 379 points and S&P 30.50 points. U.S. dollar index futures gained 0.405 to 94.860.

July West Texas Intermediate crude oil lost $1.52 to $64.85 and Brent Crude dropped 41 cents to $75.03. August gold fell $4 to $1,276.10. July corn was down 2.11%, July soybeans down 2.5% and July Kansas City wheat down 2.3%.

Asian stocks closed sharply lower, down 1.77% in Japan’s Nikkei 225, 2.78% in Hong Kong’s Hang Seng, 1.52% in South Korea’s Kospi and 3.82% in China’s Shanghai Composite. India’s Sensex was down 0.74%.

China’s Zhengzhou cotton futures fell heavily and prices ended lower on the China National Cotton Exchange. Turnover declined on China’s auction of state stocks. India’s MCX cotton futures were down sharply.

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