DTN Cotton Close: Rallies Off New Dec. Low

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    Traders eyed U.S. planted acreage report amid perceptions July notices are moving into strong commercial hands. Slight increase on average expected from March intentions.

    Cotton futures rallied off yet another new intraday low for the move to finish on a three-session high close in December Monday, while maturing July settled on a triple-digit gain.

    December settled up a modest 21 points to 67.23 cents, trading within a 160-point range from up 73 points at 67.75 to down 87 points at 66.15 cents. It hit its lowest price since Aug. 31 when it printed 65.50.

    July closed on a nine-session high finish, up 103 points to 73.68 cents, in upper quarter of its 252-point range from 73.98 to 71.46 cents. March gained 16 points to 67.18 cents.

    Traders eyed the upcoming U.S. planted acreage report following beneficial overnight rains accompanied by hail and high winds on the Texas Plains and amid perceptions that July delivery notices are moving into strong commercial hands.

    Volume slowed to an estimated 22,697 lots from 30,720 lots the previous session when spreads accounted for 8,531 lots or 28%, EFP 2,036 lots and EFS 42 lots. Options volume slipped to 8,235 lots (4,084 calls and 4,151 puts) from 9,016 lots (4,027 calls and 4,989 puts).

    Traders are reported looking for on average a U.S. planted cotton area of an estimated 12.278 million acres in the USDA tally on Friday, up 22% from last year’s 10.075 million acres.

    Estimates thus far have ranged from 12 million to 12.5 million acres, compared with 12.233 million acres in the March intentions which USDA used in compiling its initial May forecast for a crop of 19.2 million bales. The crop forecast was unchanged this month and is 12% above the final 2016 production.

    The report Friday will be based on surveys of acreage actually planted earlier this month and estimates of cotton remaining to be planted. As of June 18, 94% of the expected acreage had been planted, slightly behind the five-year average of 96%. This will be updated in the weekly crop progress report after the close Monday.

    Harvested acres are projected at nearly 11.4 million, 20% above the 9.51 million acres harvested in 2016. The 2017 estimate reflects a 7% abandonment that is below average but slightly above the last two seasons.

    The yield is forecast at 810 pounds per harvested acre, compared with 867 pounds in 2016 and 766 pounds in 2015. The yield forecast is based on the 2012-16 average, weighted by region, and reflects a proportionately larger increase in lower-yielding Southwest acreage.

    Upland plantings in the Southwest currently are estimated at 7.426 million acres, up from 5.987 million acres last year and the second highest since the early 1980s. The Southwest 2016 harvested area of 5.521 million acres produced an average yield of 764 pounds, compared with the five-year average of 626 pounds.

    The Southwest is forecast to account for 62% of the upland area in 2017, slightly above last season’s 61%, with abandonment well below the region’s average at 10% attributed to favorable spring moisture.

    Estimated abandonment — subject of much speculation — won’t be updated until the July 12 supply-demand report. The National Agricultural Statistics Service will begin “in field” crop surveys in August.

    Upland intentions in Texas were 6.9 million acres, up 22% from 5.65 million acres planted last year. If realized, the 2017 plantings would be the largest since 2011 when 7.55 million acres were seeded but only 2.85 million acres were harvested under historic drought conditions.

    Futures open interest declined 2,993 lots to 199,256 on Friday, with July’s down 3,136 lots to 1,744, December’s up 330 lots to 158,644 and March’s down 283 lots to 25,690.

    Certified stocks grew 1,740 bales to 489,157. There were 460 newly certified bales and 2,200 bales decertified. Awaiting review were 2,088 bales at Memphis.

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