DTN Cotton Close: Skids to Triple-Digit July Loss

    ©Debra L Ferguson Stock Images

    July closed on lowest finish since April 13. Mills added a total of 2,452 lots to their unpriced position. U.S. Far East premium widened. Rise forecast in 2017-18 world stocks outside China.

    Cotton futures stumbled in the overnight session and couldn’t get back up Friday, finishing below lows of the prior four sessions in July.

    July lost 114 points to settle at 77.77 cents, its lowest finish since April 13 and just off the low of its 131-point range from up 11 points at 79.02 — where it opened overnight — to down 120 points at 77.71 cents. It dropped 110 points for the week.

    December closed down 63 points to 74.12 cents, trading within a 76-point range from 74.85 to 74.09 cents and losing 50 points for the week. May, facing its last trading day on Monday, settled down 107 points at 79.76 cents.

    Volume increased to an estimated 21,831 lots from 14,461 lots the prior session when spreads accounted for 4,554 lots or 31% and EFP 22 lots. Options volume rose to 3,786 lots (2,534 calls and 1,252 puts) from 1,426 lots (832 calls and 594 puts).

    Unpriced on-call positions increased by a board total of 2,452 lots on the mill side last week and by 1,466 lots on the producer side, according to call figures reported by the Commodity Futures Trading Commission after the close Thursday.

    Mills had an unfixed call position of 109,093 lots and producers had 35,294 lots. The net call difference widened 986 lots to 73,799, which was 28.9% of the rising open interest. The unpriced mill position outweighed that of producers by 3.1:1.

    In July, mills priced 349 lots and producers priced 239 lots, reducing their unpriced positions to 45,384 lots and 3,930 lots, respectively. The net difference dipped 110 lots to 41,454, 30.3% of July’s expanding open interest.

    New-crop activity saw mills adding 1,334 lots in December to boost their unpriced position to 29,771 lots and producers adding 1,889 lots to raise theirs to 22,144 lots.

    On the competitive-pricing front, the average of the five lowest-priced world growths for the Far East eased 10 points to 87.18 cents during the week ended Thursday, according to USDA calculations, while the lowest-quoted U.S. growth landed there edged up 13 points to 87.63 cents.

    The U.S. premium thus widened 23 points to 0.45 cent. The adjusted world price for the program week ahead, reflecting transportation and quality differentials, is 69.75 cents, which again of course leaves the marketing loan gain at zero.

    Forward or new-crop world quotes slipped 39 points to an average of 81.75 cents, widening the 2017-18 discount by 29 points to 5.43 cents.

    Cotton Outlook has forecast a 2017-18 world output increase of more than 1.7 million metric tons (7.8 million 480-pound bales) to 24.4 million (112.07 million bales), close to the average of the last 10 seasons.

    While world production and consumption are projected broadly in balance, Cotton Outlook indicated, a predicted rise in world stocks outside China of more than 1.9 million tons (8.7 million bales) “sends a rather bearish signal.”

    Futures open interest increased 1,456 lots to 263,028 Thursday, with May’s down 17 lots to 23, July’s up 407 lots to 141,874 and December’s up 1,018 lots to 105,741.

    Certified stocks grew 1,366 bales to 324,604. There were 3,214 newly certified bales and 1,848 bales decertified. Awaiting review were 4,220 bales — 964 bales at Galveston and 3,256 bales at Memphis.

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