DTN Cotton Open: Cotton Poised for Monthly Losses

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    U.S. cotton planting progress reached 63% completed. Cash online grower sales totaled 163 bales on The Seam. China factory activity held steady in May.  

    Cotton futures traded slightly lower in the most active contracts early Wednesday, with July poised for a bearish monthly technical reversal.

    July hovered off 25 points at 77.01 cents, trading within a 43-point range from 77.35 to 76.92 cents on a contract volume of 2,003 lots. It closed last month at 78.87 cents. December ticked down 35 points to 72.40 cents, trading within a 37-point range from 72.72 to 72.35 cents on a turnover of 1,186 lots. It finished last month at 74.62 cents.

    On the U.S. crop scene, planting advanced 11 percentage points to 63% completed during the week ended Sunday, six points ahead of last year but a point behind the five-year average, according to the USDA progress report released after the close Tuesday.

    Seven percent was squaring, compared with 5% a year ago and 4% for the five-year average. Squaring was reported in six states, including 22% in Arizona, 3% in Arkansas, 1% in Georgia, 8% in Louisiana, 2% in Tennessee and 11% in Texas.

    Growers in Texas planted at a 10-point pace to reach 52% completed, up from 42% a year ago and even with the five-year average. Progress was ahead of average in Alabama, Louisiana, Mississippi, Oklahoma and Tennessee. Louisiana led at 98% seeded.

    Planting lagged the five-year average in Arizona, California, Georgia, Kansas, Missouri, North Carolina and Virginia and also matched the average in Arkansas and South Carolina. The biggest point lag was in California at 72% planted, against 96% on average.

    In the market Tuesday, July settled marginally higher and December slightly lower. July’s nine-day moving average closed a second day below the also declining 18-day MA, a negative technical reading.

    The inverted July-December straddle traded from 443 to 530 points and widened 21 points to settle at a 451-point July premium on a volume of 3,672 lots. The July premium widened a second day for the first time since a three-day widening as of May 15. December-March traded between an inverted 16 and 33 points and widened 12 points to close at a 280-point December premium on 1,521 lots.

    In cash online trading, 163 bales changed hands on prices averaging 72.59 cents on The Seam’s grower-to-business platform. Premiums averaged 17 cents over loan values. All the bales stapled 35 or more and were from the Southwest. These were the first online sales since May 19 when two bales traded.

    The Cotlook A Index of world values of world values gained 10 points to 87.20 cents, while the Forward A Index dipped 20 points to 82.20 to widen the difference to 500 points.

    In outside markets, U.S. dollar index futures dipped to a three-session low to 97.000 and traded down 0.145 to 97.065, while Dow Jones futures ticked up 36 points and S&P futures up 5 points.

    Crude oil dropped $1.06 to $48.60, Brent crude fell $1.31 to $50.63 and August gold gained $3.50 to $1,269.20. Grains were higher, up 1% in July corn, 0.9% in July soybeans, 0.5% in July Chicago wheat and 0.6% in July Kansas City wheat.

    Earlier, Asian stocks were mixed, down 0.14% in Japan’s Nikkei 225, 0.16% in Hong Kong’s Hang Seng, up 0.16% in South Korea’s Kospi and up 0.24% in China’s Shanghai Composite. European stocks were higher, up 0.67% in Britain’s FTSE 100, 0.7% in Germany’s DAX and 0.45% in France’s CAC 40.

    China’s Zhengzhou cotton futures closed down and prices ended mostly lower on the China National Cotton Exchange.

    In overnight news, a gauge of manufacturing activity in China held steady in May, viewed as a sign that the recovery in the world’s No. 2 economy and largest cotton consumer is holding up.

    The official manufacturing purchasing managers index came in at 51.2 in May, unchanged from April, according to the China Federation of Logistics and Purchasing, which releases the data with the National Bureau of Statistics. The reading beat a median of 51 forecast by economists.


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