Consumer inflation firmed and spending rose in December. Commercials shaved their net cotton shorts 777 lots or 0.4% to 175,290. Cash online grower sales rose to 26,513 bales and business sales declined to 4,185 bales.
Cotton futures ticked modestly lower in early dealings Monday, reversing in spot March off a new intraday high overnight since Jan. 5.
March hovered off 29 points to 74.56 cents, trading within a 113-point range from 75.32 to 74.19 cents on a contract volume of 4,170 lots. May traded down 19 points to 72.50 cents on a turnover of 1,489 lots.
A period of index funds rolling longs from March opened with this session, with the Jim Rogers fund first out of the gate.
In the news, the Federal Reserve’s preferred measure of inflation rose last month to the strongest reading in more than two years, providing new evidence of firming prices a day before policy makers meet to discuss the path of interest rates this year, Dow Jones Newswires reported.
The personal-consumption expenditures price index advanced 0.2% in December from the prior month, the Commerce Department said. The measure of consumer inflation rose 1.6% from a year earlier, a 12-month increase last seen in September 2014. The reading was last higher in July that year.
Meanwhile, the report showed consumer spending increased 0.5% in December and personal incomes rose 0.3% on the month.
The annual inflation reading remains below the Fed’s 2% target, but the PCE index has accelerated from nearly flat just more than a year ago.
In outside markets, U.S. dollar index futures traded up 0.280 to 100.805, while Dow Jones futures dropped 61 points and S&P futures 7.75 points. Crude oil lost 14 cents to $53.03, Brent crude shed 16 cents to $55.36 and February gold gained $4.40 to $1,192.80. March corn fell 1.1%, March soybeans slid 1.4% and March Chicago wheat and March Kansas City wheat fell 1%.
Earlier, the Stoxx Europe 600 shed 0.8% late morning, while markets in Asia mostly weakened. Japan’s Nikkei 225 fell 0.5%. Markets in China, Hong Kong and South Korea were closed for the Lunar New Year holiday. India’s MCX cotton futures were mixed.
Meanwhile, trend-following funds reduced their net longs in cotton futures-options combined 4,202 lots to 99,708 in the week ended Tuesday, while index funds raised theirs 2,172 lots to 65,276 and non-reportable traders — mostly small specs — boosted theirs by 1,253 lots to 10,939.
Commercials were on the other side, reducing their net shorts 777 lots or 0.4% to 175,920, according to traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday. They covered 904 shorts to cut those to 223,643 and liquidated 127 longs to shave those to 127 lots.
Managed-money funds increased their futures-options net longs by a net 2,706 lots to 87,381, adding 3,327 longs and 621 shorts. In futures only, non-commercials reduced their net shorts 1.9 percentage points to 40.9% of the open interest.
In cotton futures Friday, March closed higher for the third session in a row and the seventh in the last eight, finishing up 0.89% for the day and 2.5% for the week on its highest settlement since Aug. 8.
The March-May spread traded from 45 to 56 points carry and widened five points to close at 54 points on a volume of 3,630 lots. May-July traded from 43 to 54 points and widened four points to settle at 51 points on 1,269 lots. The July-December inversion settled on a new high of 411 points after trading from 380 to 420 points on 701 lots.
In cash online trading, grower-to-business sales rose to 26,513 bales from 20,866 bales on The Seam. Prices averaged 70.40 cents, up from 70.34 cents, reflecting a dip to 16.45 cents from 16.60 cents in premiums over loan repayment rates.
Business-to-business sales declined to 4,185 bales from 6,900 bales on prices averaging 71.29 cents, up from 69.50 cents, and premiums of 16.92 cents, down from 17.70 cents.
The Cotlook A Index of world values gained 35 points to 83.55 cents, widening the premium over the prior-day March futures settlement by four points to 9.36 cents.
