DTN Cotton Close: Jumps to Triple-Digit Gains

    ©Debra L Ferguson Stock Images

    December hit new contract high. U.S. stock indexes surged, U.S. dollar advanced and grains closed higher. Anticipation of a friendly export sales report may have contributed to support. China’s auctions set to begin Monday.

    Cotton futures jumped to triple-digit gains Wednesday amid soaring U.S. stock indexes, a higher U.S. dollar on signs that an interest rate hike could come soon and a second day of higher grains prices.

    Benchmark May settled up 152 points to 77.86 cents, near the high of its 181-point range from down 17 points at 76.17 to up 164 points at 77.98 cents. It closed above last week’s high at its highest settlement since Feb. 14.

    Maturing March also settled up 152 points on differences at 76.85 cents. July gained 125 points to close at 78.73 cents and December rose 52 points to finish at 74.90 cents. December posted a new contract high at 74.92 cents, eclipsing the old mark of 74.60 on Feb. 15 and again Feb. 16.

    The Dow Jones industrial average surged more than 300 points, pushing above 21,000 points for the first time, while U.S. dollar index futures traded to the highest intraday mark since Jan. 11.

    May corn closed up 2.2%, May soybeans 1.6%, May Chicago wheat 3.2% and May Kansas City wheat 2.9%.

    Cotton volume was estimated at 39,428 lots, up from 25,062 lots the prior day when spreads accounted for 13,327 lots or 53%. Options volume increased to 6,445 lots — 2,727 calls and 3,718 puts — from 4,171 lots.

    Anticipation of a friendly U.S. weekly export sales report may have contributed to support. The USDA report is scheduled for release at 7:30 a.m. CST Thursday.

    Net upland sales the previous reporting week ended Feb. 16 topped expectations, as they’ve done rather consistently, at 367,200 running bales. Upland shipments also were strong at 340,600 RB.

    Upland sales the last four weeks have averaged 281,500 RB a week and upland shipments have averaged 372,280 RB. The sales pace has prompted conjecture that USDA may again raise its 2016-17 export forecast in its monthly supply-demand report on March 9.

    Sharply higher exportable supplies, improved quality and reduced competition from some major foreign exporters — India, Brazil and Central Asia — have enhanced U.S. cotton’s position, and USDA expects U.S. exports to capture the largest share of world trade in six years.

    The weekly sales report will precede the start of daily auctions from China’s huge government-owned stockpile on Monday. The auctions will continue through Aug. 31 and may be extended.

    China sold about 12.2 million bales in last year’s auctions, which ran from May 2 through Sept. 30. A similar amount is expected to be offered this year, trade sources say, and daily offerings — something like 138,000 bales — to only slightly exceed the mill use rate.

    Futures open interest grew 2,576 lots Tuesday to 266,379, with March’s unchanged at 101 lots, May’s up 716 lots to 161,902, July’s up 869 lots to 50,946 and December’s up 830 lots to 46,569. Certified stocks were unchanged at 325,590 bales.

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