DTN Cotton Close: Bounces to Finish Slightly Ahead

    Photo by Larry Stalcup

    Action relatively subdued ahead of the U.S. weekly export sales report. U.S. upland plantings reported projected by Informa at 10.5 million acres.

    Cotton futures bounced from a modest early loss to finish slightly ahead in spot March in relatively subdued action Wednesday ahead of the U.S. weekly export sales report.

    March settled up 31 points 73.88 cents, in the upper third of its 103-point range from down 43 points at 73.14 to up 60 points at 74.17 cents. It traded within the prior day’s 247-point range.

    May edged up 15 points to close at 74.52 cents, July rose 12 points to 75.14 cents and December eked up a point to 71.63 cents.

    Volume slowed to an estimated 25,936 lots from 50,045 lots the prior session when spreads accounted for 25,615 lots or 51%, EFP 129 lots and EFS 30 lots. Options volume totaled 2,226 calls and 1,628 puts.

    Expectations appear to range mostly from around 250,000 to 350,000 running bales of upland for the U.S. weekly export sales report scheduled for release at 7:30 CST a.m. on Thursday.

    Prices during the reporting week ended Jan. 19 — a holiday-shortened trading period — ranged on a closing basis within a tight span from 72.11 to 72.69 cents, basis March, and intraday from 71.81 to 73.29 cents.

    Net upland sales the prior reporting week posted a six-week high at 346,500 RB. Export demand thus far this season has been much stronger than expected, resulting in USDA raising its all-cotton 2016-17 forecast earlier this month to 12.5 million statistical bales.

    The forecast is up from 9.15 million 480-pound bales exported last season and is a million bales above the August forecast for 2016-17 and 2 million bales above the initial projection last May.

    Upland sales the last four weeks have totaled 1.109 million RB and have averaged 277,300 RB a week, while upland shipments have averaged 238,300 RB. Shipments have lagged the pace needed to reach the estimate.

    Looking ahead, Informa Economics, Memphis-based analytical firm, has estimated U.S. 2017 upland plantings at 10.5 million acres, DTN reported, up from 9.88 million acres seeded last year.

    That’s lower than some other early projections. A Farm Futures magazine report last week showed an all-cotton increase to 11.45 million acres from 10.075 million acres in 2016.

    The National Cotton Council will report results of its annual planting intentions survey on Feb. 11 at its annual convention in Dallas. A forecast on acreage intentions also is expected at USDA’s Outlook Forum, Feb. 23-24, and the National Agricultural Statistics Service will release its prospective plantings report on March 31.

    While a lot can happen of course between now and planting time, cotton acreage increases are expected in the Delta, Texas and the Far West. A significant increase is foreseen by some in high-yielding California, owing partly to a substantial snowpack.

    The overall Sierra snowpack stood at 151% of average as of Jan. 18, according to the California Department of Water Resources, with increases seen in reservoirs and ponding basins throughout the state. Still, the U.S. Drought Monitor indicated much more rain and snow were needed to alleviate extreme drought conditions in the central San Joaquin Valley.

    Futures open interest fell 1,046 lots Tuesday to 264,328, with March’s down 6,230 lots to 156,812 and March’s up 4,466 lots to 52,020. Cert stocks grew 178 bales to 125,612. Awaiting review were 2,061 bales.

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