DTN Cotton Close: March Settles on 3 Week High

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    U.S. upland classing reached 12.879 million RB last week, 83% of the estimated crop. Revised CFTC on-call data showed mills added 1,286 lots to their unpriced 2016-17 position. Upbeat Chinese factory data reported.

    Cotton futures finished the first trading day of 2017 on triple-digit gains in 2016-17 contract months Tuesday, led by spot March.

    March advanced 113 points to settle at 71.78 cents, just off the day’s high and its highest close since Dec. 13, though it remained within the prior-session range on a 71-point trading band from up 49 points at 71.14 to up 120 points at 71.85 cents.

    May gained 110 points to close at 72.12 cents, while new-crop December added 83 points to finish at 70.37 cents.

    Volume slipped to an estimated 21,668 lots from 23,203 lots the previous session when spreads accounted for 6,883 lots or 30% and EFP one lot. Options volume totaled 753 calls and 2,269 puts.

    On the U.S. crop scene, upland classing slowed to 420,289 running bales during the week ended Dec. 29 to boost the total for the season to 12.879 million RB, according the latest USDA weekly figures. That was up 23% from 12.489 RB graded through Dec. 31 last season.

    The USDA had classed 83% of the estimated crop, compared with 87% of the final 2015 crop at the corresponding point last season. Cotton tenderable on futures contracts totaled 67.3% for the week and 71.4% for the year, up from 45.6% and 56%, respectively, last season.

    Classing of 16,593 RB of Pima brought the extra-long staple total to 436,882 RB, compared with 363,202 RB a year ago. The all-cotton count of 12.282 million RB was up from 10.853 million RB last season.

    Daily classing figures indicated USDA graded an additional 319,798 RB of upland through Monday, including 159,520 RB or about 50% at Lubbock.

    Meanwhile, revised on-call data reported by the Commodity Futures Trading Commission (see morning cotton comments) showed mills added 1,286 lots to their unpriced position in 2016-17 marketing year months during the week ended Dec. 23.

    This raised their unfixed position in the March, May and July contracts to 86,724 lots, while producers priced 519 lots to shave theirs to 8,839 lots. The net call difference increased 1,805 lots to 77,885, which was 34.7% of the declining 2016-17 open interest. The unpriced mill position outweighed that of producers by a ratio of 9.81:1.

    On the international scene, upbeat Chinese factory data bolstered Asian stock markets, with the Caixin manufacturing purchasing managers’ index advancing at its fastest rate in three years. The index stood at 51.9, up from forecasts of 50.7 and the prior month’s reading of 50.9.

    In data released over the weekend, China’s official manufacturing sector index dipped to 51.4 in December from 51.7 the prior month, indicating the world’s second largest economy and largest cotton consumer continued to expand, though at a slower rate.

    Futures open interest grew 3,537 lots Friday to 245,312, with March’s up 2,755 lots to 164,670 and May’s up 346 lots to 40.726. Certified stocks were unchanged at 40,470 bales.

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