DTN Cotton Open: Tumbles to Steep Losses

    Hurricane Irma weakened to a tropical storm and traders awaited USDA’s monthly supply-demand reports. Trend-following funds boosted net longs 22,621 lots. Cash online sales rose to 1,101 bales on The Seam.

    Cotton futures traded on steep losses on heavy volume early Monday after falling as much as the 300-point daily limit as Hurricane Irma weakened and traders looked to USDA’s monthly supply-demand projections.

    December hovered off 233 points to 72.26 cents, trading within a 386-point range from 75.45 to 71.59 cents on a contract volume of 8,240 lots. March ticked down 203 points to 71.38 cents, trading within a 370-point range from 74.20 to 70.50 cents on a turnover of 2,547 lots.

    Irma made landfall Sunday morning at Cudjoe Key, about 20 miles outside Key West, as a Category 4 storm that was 400 miles wide. By Monday morning, Irma was down to a tropical storm but still producing wind gusts near hurricane strength.

    The storm was expected to weaken further as it moves through cotton country, but the National Hurricane Center warned that wind hazards will spread northward through Georgia and into portions of Alabama, Tennessee, South Carolina and North Carolina. Heavy rains and flooding also may extend from those areas into parts of Mississippi.

    The updated crop and supply-demand projections are scheduled for release at 11 a.m. CDT on Tuesday.

    In outside markets, U.S. dollar index futures fell 0.340 to 91.665, while Dow Jones futures traded up 119 points and S&P futures up 12 points on relief that Irma weakened and North Korea didn’t conduct a nuclear test over the weekend.

    Crude oil gained 21 cents to $42.69, Brent crude dipped 24 cents to $53.54 and December gold fell $15.20 to $1,336. December corn was down 0.42%, November soybeans up 0.16%, December Chicago wheat down 0.91% and December Kansas City wheat down 1.08%.

    Asian stocks closed higher, up 1.41% in Japan’s Nikkei 225, 1.04% in Hong Kong’s Hang Seng, 0.86% in South Korea’s Kospi and 0.27% in China’s Shanghai Composite Index. European shares traded higher, with Britain’s FTSE 100 up 0.36% and Germany’s DAX and France’s CAC 40 both up 1.01%.

    China’s Zhengzhou cotton futures settled mostly with gains and prices also ended mostly higher on the China National Cotton Exchange.

    Meanwhile, trend-following funds boosted their net longs 22,621 lots to 54,710 in ICE cotton futures-options combined during the week ended Tuesday, according to supplemental traders-commitments data reported by the Commodity Futures Trading Commission after the close Friday.

    They added 14,995 longs and covered 7,627 shorts, raising their net shorts 70%. Index funds hiked their net longs 843 lots to 72,681, while non-reportable traders bought 2,893 lots to flip to net long 1,049 lots from net short 1,844 lots.

    Commercials sold 26,357 lots, adding 22,800 shorts and liquidating 3,557 longs to increase their net shorts to 128,439 lots. Combined open interest grew 21,459 lots to 298,219.

    In futures only, non-commercials kicked their net longs up 7.8 percentage points to 24.4% of the open interest. They raised their net longs 20,203 lots to 57,354, adding 16,021 longs and covering 4,182 shorts. Open interest expanded 9,833 lots to 234,800.

    In the market Friday, December hit a new contract high but not a new contract high settlement, finishing modestly ahead at a four-session high close but in the lower third of the session’s range.

    The inverted December-March straddle traded between 103 and 177 points and narrowed 17 points to settle at a 118-point December premium on a volume of 5,245 lots. March-May traded between 33 and 15 points carry and widened two points close at a 26-point May premium on 1,459 lots. July’s settlement premium over May widened 13 points to 22 points on 923 lots.

    In cash online trading, sales increased to 1,101 bales from 698 bales on The Seam. Prices rose to an average of 72.10 cents from 70.30 cents, reflecting gains to 21.33 cents from 20.09 cents in premiums over loan values. Offerings were 5,805 bales.

    The Cotlook A Index of world values dropped 25 points to 84.05 cents, narrowing the premium over the prior-day December futures settlement two points to 9.78 cents.

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