DTN Cotton Close: Futures Broke Out of Doldrums in a Big Way

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    U.S. export sales expected to remain above the weekly pace required to match the USDA forecast, but shipments may continue to lag. Upland loans outstanding rose to 4.492 million RB.

    Cotton futures broke out of the doldrums Thursday, jumping to triple-digit gains on the way to settling on an eight-session high finish.

    March closed up 75 points to 70.50 cents, in the upper half of its 150-point range from down 11 points at 69.64 to up 139 points at 71.14 cents. It tested the prior-session low right off the bat overnight, leaped above last week’s high late morning, and settled on its highest close since Dec. 16.

    May also gained 75 points, closing at 70.90 cents, while December 2017 added 56 points to settle at 69.51 cents. Some traders already had left for the long holiday weekend.

    Volume climbed to an estimated 19,339 lots from 10,918 lots the previous session when spreads accounted for 3,511 lots or 32% and EFP and EFS 22 lots each. Options volume totaled 1,333 calls and 1,506 puts.

    Traders appeared generally to expect U.S. weekly export sales in Friday’s report to remain above the pace required to match USDA’s export estimate, but shipments may continue to lag.

    The report, scheduled for release at 7:30 a.m. CST, has been delayed a day because of the Christmas holiday. The data will be for the week ended Dec. 22, a period in which March futures fell to the lowest intraday price — 69.33 cents — since Nov. 14.

    Closing March prices that reporting week ranged from 69.34 to 71.04 cents. The prior week’s figures showed net upland sales of 276,700 running bales and upland shipments of 210,200 RB, down 6% and up 18%, respectively, from the four-week averages.

    Upland sales the last six weeks have totaled a robust 1.665 million RB and have averaged 298,900 RB the last four weeks. Shipments of upland the last four weeks have averaged 197,400 RB, compared with an average of 123,000 RB the prior four weeks.

    Meanwhile, U.S. upland loans outstanding rose by 375,396 RB to 4.492 million RB during the week ended Dec. 19, the latest USDA figures showed.

    Entries were 621,288 RB and repayments were made on 245,892 RB. Upland cotton under loan included 503,727 RB of Form A loans issued to individual growers and 3.988 million RB of Form G loans issued to marketing cooperatives or loan servicing agents.

    Loans outstanding in Texas were 1.126 million RB, including 2,303 RB of Form A loans and 1.124 million RB of Form G loans.

    Futures open interest declined 1,541 lots Wednesday to 242,268, with March’s down 1,423 lots to 161,896 and May’s down 387 lots to 40,771. Certified stocks were unchanged at 40,562 bales.

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