DTN Cotton Open: Ticks on Modest Gains in Early Going

    ©Debra L Ferguson Stock Images

    May bounced a day after testing a chart support area. Cash online sales increased to 5,266 bales on The Seam.

    Cotton futures traded on modest gains in the early going Wednesday, a day after testing an important chart support area.

    Spot May hovered up 23 points to 77.07 cents, trading within a 60-point range from 76.67 to 77.27 cents on a contract volume of 3,150 lots. July edged up 20 points to 78.29 cents on a turnover of 1,366 lots and December ticked up 11 points to 74.99 cents on 817 lots.

    In outside markets, U.S. dollar index futures eased 0.050 or 0.1% to 99.565, while Dow Jones futures ticked down 42 points and S&P futures down 1.75 points. U.S. stocks, the greenback and government bond yields posted their steepest declines of the year on Tuesday.

    Crude oil lost 57 cents to $47.67, Brent crude shed 67 cents to $50.29 and April gold gained $2.50 to $1,249. May corn was down 0.2%, May soybeans also down 0.2%, May Chicago wheat down 0.7% and May Kansas City wheat down 0.8%.

    Earlier, Asian stock markets fell following the selloff on Wall Street. Japan’s Nikkei 225 dropped 2.13%, Hong Kong’s Hang Seng 1.11%, China’s Shanghai Composite Index 0.5% and South Korea’s Kospi 0.46%. European stocks also were lower, down 0.47% in Germany’s DAX and 0.39% in France’s CAC 40. Britain’s FTSE 100 lost 0.78%.

    China’s Zhengzhou cotton futures ended more than a hundred yuan lower and prices lost ground on the China National Cotton Exchange. More than half the cotton on offer went unsold in the morning session of China’s auction of reserve stocks. India’s MCX cotton futures closed lower and local prices eased.

    In ICE cotton futures Tuesday, May broke through a key chart support area at 76.80 but closed just above that and remained on a closing basis above a 61.8% Fibonacci retracement (76.73) of the rally from the Feb. 17 low at 75.05 to the March 6 contract high at 79.46. The break appeared not to have generated as much selling as might have been expected on such a move.

    The May-July spread traded from 116 to 130 points carry and widened four points to settle on a new low close at a 125-point July premium on a volume of 5,080 lots. Inverted July-December widened 34 points to settle at a 321-point July premium on a volume of 3,043 lots, trading from 280 to 328 points. The December-March inversion narrowed nine points to a settlement difference of seven points on 149 lots.

    In cash online trading, grower-to-business and business-to-business sales increased to 5,266 bales from 4,142 bales on The Seam. Prices fell to a gross average of 71.44 cents from 73.30 cents, reflecting a dip to 21.08 from 20.77 cents in gross premiums over loan repayment rates. Offerings were 67,578 bales.

    The Cotlook A Index of world values fell 85 points to 86.85 cents, widening the premium over the prior-day May futures settlement 18 points to 9.52 cents.

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