DTN Cotton Close: Reverses From New High

    ©Debra L Ferguson Stock Photography

    U.S. dollar index extended decline. Slowdown in torrid U.S. export sales pace wouldn’t be surprising. Cotton Grower magazine survey pointed to increased 2017 plantings.

    Cotton futures reversed off a new high for the move to settle modestly lower Thursday, snapping a string of five higher closes in a row.

    Spot March finished down 30 points to 73.78 cents, near the low of its 176-point range from up 129 points to 75.37 — highest since Aug. 9 — to down 47 points at 73.61 cents. It hit the high in early morning, fell to the low about an hour later and chopped back and forth into the close.

    May dipped 29 points to settle at 73.93 cents, while new-crop December eased off 12 points to finish at 71.47 cents.

    The early surge swept March through a 75% retracement (74.96) of the skid from the Aug. 5 high at 78 cents to the Sept. 1 low at 65.85 cents.

    Cotton couldn’t hold gains even as the U.S. dollar index extended a sharp decline from Tuesday’s 14-year high against a basket of currencies.

    Uncertainty within the Federal Reserve over the future path of interest rates contributed to the dollar pullback, reports indicated. Minutes from the Fed’s December meeting, released Wednesday, indicated officials were unsure about the potential impact of President-elect Donald Trump’s policies on the economy.

    Volume slipped to an estimated 43,298 lots from 54,844 lots the previous session when spreads accounted for 18,963 lots or 35%, EFP 44 lots and EFS 21 lots. Options volume totaled 10,741 calls and 5,519 puts.

    Traders will view the delayed U.S. export sales-shipments report on Friday with an eye on any fresh indications of how USDA may treat its estimate of 2016-17 exports in next week’s supply-demand forecasts.

    The weekly report, usually released on Thursdays, has been delayed a day by the New Year holiday on Monday.

    Net upland sales were a strong 343,200 running bales during the prior reporting week ended Dec. 22 and have averaged 334,200 RB the last four weeks. Upland shipments hit a marketing year high of 267,900 RB and have a four-week average of 231,500 RB.

    A slowdown from the torrid weekly sales pace wouldn’t be surprising, especially also since the reporting week spanned the Christmas holiday. All-cotton commitments of 8.61 million RB stand 66% ahead of a year ago and have reached 73% of the USDA export forecast. A year ago, commitments were 58% of final 2015-16 shipments.

    On the U.S. crop scene, a survey by Cotton Grower magazine indicated producers intend to plant 10,887,075 acres of cotton in 2017, up 7.3% from the USDA estimate of 10.145 million acres seeded in 2016.

    The intentions were linked to outstanding cotton yields in most regions in 2016 and flagging competitive crop prices, the magazine indicated, and would represent a robust rebound from the historically low 8.581 million acres planted in 2015.

    Growers in Texas indicated intentions to plant 5,932,500 acres, up 4.1% from 5.7 million acres last year. Georgia is set to remain the clear No. 2 cotton state, the magazine said, but is poised to see its cotton acreage remain flat — possibly even fall — in 2017.

    Futures open interest increased 8,237 lots Wednesday to 255,395, with March’s up 8,223 lots to 173,458 and May’s down 861 lots to 40,720. Cert stocks were unchanged for the third consecutive day at 40,470 bales.

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