DTN Cotton Close: Higher on Thin Volume

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Weekly export sales report may show old-crop cancellations, but 2017-18 commitments are still up nearly 2.1 million RB from a year ago. Slower new-crop sales generally expected, but again 2018-19 commitments are up more than 1.3 million RB over forward bookings a year ago.

Cotton futures settled on the plus side on thin volume Wednesday, with December finishing another narrow-range session modestly ahead to recapture most of what it lost the prior day.

December gained 37 points to close at 84.87 cents, near the high of its 80-point range from down 32 points at 84.19 to up 48 points at 84.99 cents. Maturing July led the gains, settling up 71 points to 85.75 cents.

The market couldn’t gain much traction in either direction as traders awaited reports on U.S. weekly export-sales shipments on Thursday and planted acres on Friday.

Estimated volume declined to a holiday-like 10,400 lots from 14,325 lots the previous session when spreads accounted for 3,408 lots or 24%, EFS 132 lots and EFP 10 lots. Options volume fell to 2,591 lots (1,699 calls and 892 puts) from 7,398 lots (3,987 calls and 3,411 puts).

Some traders expect cancellations again to exceed fresh sales in the U.S. export sales report, but 2017-18 commitments are up nearly 2.1 million running bales from a year ago. A slowdown is generally expected in new-crop sales, but again 2018-19 commitments hold a lead of more than 1.3 million RB over forward bookings a year ago.

The weekly report is scheduled for release by USDA at 7:30 a.m. CDT. Prices during the reporting week ended last Thursday ranged from 93.14 to 83.01 cents in July and from 92.80 to 82.94 cents in December.

Net upland cancellations the prior week of 112,400 running bales for shipment this season topped total net sales the prior three weeks of 58,300 RB, resulting in a net four-week commitments reduction of 54,100 RB. Net upland sales the prior four weeks averaged 146,700 RB per week.

With 2017-18 all-cotton commitments still up 14% from cumulative sales a year ago and shipments continuing a rapid pace, some analysts are sticking to estimates that exports will exceed the USDA projection despite uncertainty injected by trade tensions.

Net new-crop upland export sales the last four weeks have averaged a strong 216,800 RB a week, compared with 227,100 RB the prior four weeks. All-cotton new-crop commitments are 35% of USDA’s 2018-19 export forecast and are up 33% from forward 2017-18 sales a year ago.

Upland shipments the last four weeks have averaged 430,600 RB a week, well above the pace needed to reach the USDA estimate. Exports the prior four-weeks averaged a torrid 442,200 RB. All-cotton exports are 5% ahead of year-ago shipments.

Certified stocks grew 3,274 bales to 92,009 on Tuesday, the daily ICE report showed. The additions were at Memphis. Open interest declined 1,584 lots to 257,237, with July’s down 104 lots to 786 and December’s down 1,302 lots to 181,336.

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