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Cotton Reclaims Some of Recent Losses


U.S. planted acreage report looms Thursday. Trend-following funds shaved their net-longs for a second week. Cash grower sales jumped to 2,840 bales on The Seam.

Cotton futures ticked in the green in early dealings Monday, reclaiming some of the previous session’s losses.

Most-active December hovered up 74 points to 65.16 cents, in the upper quarter of its 114-point range from 64.25 to 65.39 cents on a contract volume of 2,304 lots. It posted the session low in the early minutes of overnight trading.

Still no July deliveries have been issued on this second day of the notice period, which was up 50 points at 65 cents.

Traders expect some end-of-month and quarter positioning this week ahead of the long-awaited planted acreage report from USDA on Thursday, followed by a long holiday weekend. Trading desks may be lightly staffed on Friday.

In outside markets, U.S. dollar index futures traded sharply higher and U.S. equity futures and oil prices lower as markets operated under deep uncertainty following Britain’s decision to leave the European Union.

Greenback futures surged 1.1140 to 96.715, while Dow Jones futures fell 94 points and S&P futures 9.00 points. Crude oil shed $1.10 to $46.54, Brent crude lost 87 cents to $47.54 and August gold gained $11.11 to $1,333.50. December corn gained 1.1%, November soybeans rose by 1.7%, July Chicago wheat added 0.4% and July Kansas City wheat was up 0.6%.

European stock markets added to Friday’s steep losses, with Britain’s FTSE 100 and Germany’s DAX each down 1.3%. Asian equities were mixed, up 2.4% in Japan’s Nikkei 225 and up 1.2% in China’s Shanghai Composite Index but down 0.2% in Hong Kong’s Hang Seng. China’s Zhengzhou cotton futures ended mostly lower, prices settled mixed on the China National cotton Exchange and India’s MCX cotton futures were mixed.

Meanwhile, trend-following funds reduced their net-longs by 993 lots to 45,528 in cotton futures and options combined during the week ended June 21, according to supplemental traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

They liquidated 1,280 longs and covered 287 shorts, shaving their net-longs for a second week. Index funds cut their net-longs by 785 lots to 66,530, while traders with non-reportable positions shaved theirs by a mere 11 lots to 7,895.

Commercials covered 2,860 shorts and liquidated 1,070 longs to cut their net shorts by 1,790 lots to 119,962. Prices gained 48 points for the reporting week, basis December.

In futures only, non-commercials sold a net 1,491 lots, liquidating 1,978 longs and covering 487 shorts to pare their net-longs by 1,491 lots to 45,225. However, their share of the declining open interest edged up to 23.9% from 23.3%.

In the market Friday, December fell below lows of the previous five sessions in the wake of Britain’s vote to leave the European Union and closed down 100 points for the day and 150 points for the week.

The December-March spread traded from 53 to 62 points carry and narrowed four points to settle at 59 points on a volume of 935 lots, while March-May traded from 48 to 38 points carry and widened five points to close at 47 points on 264 lots. Maturing July settled eight points over December, inverting from 54 points carry on a spread volume of 352 lots.

In cash online trading, grower-to-business sales quickened to 2,840 bales from 59 bales. This was the largest one-day G2B volume since April 20. Prices climbed to an average of 65 cents from 59.45 cents, reflecting gains to 13.22 cents from 7.86 cents in premiums over loan repayment rates.

Business-to-business sales quickened to 1,172 bales from 333 bales on prices averaging 59.74 cents, down from 60.92 cents, and premiums of 8.41 cents, down from 9.10 cents.

The 2015-16 Cotlook A Index of world values gained 100 points to 75.55 cents, narrowing the premium over the prior-day futures settlement by 94 points to 10.67 cents, while the Forward A 2016-17 Index rose 105 points to 73.60 cents, widening the premium over Thursday’s December futures close by 16 points to 8.18 cents.

Source: Ag Fax

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