DTN Cotton Close: Ends on Slight Old-Crop Gains

    Photo by MSU Extension Service/Kevin Hudson

    Volume was light Wednesday. Traders awaited U.S. weekly export sales-shipments report. China sold about 81% of its second-day offering.

    Cotton futures finished mixed on light volume Wednesday, with old-crop contracts completing an indecisive day on slight gains.

    May gained 46 points to close at 84.44 cents, snapping a three-day losing streak and settling in the upper half of its 146-point range from up 89 points at 83.87 to down 57 points at 82.41 cents.

    July closed up 34 points at 83.20 cents, trading within a 117-point range from 83.60 to 82.43 cents. December closed down 47 points at 78.02 cents, trading within a 94-point range from 78.75 to 77.81 cents.

    Volume slowed to an estimated 21,000 lots from 40,732 lots the previous session when spreads accounted for 17,871 lots or 44%, EFS 208 lots and EFP 22 lots. Options volume declined to 4,108 lots (2,013 calls and 2,095 puts) from 8,583 lots (5,676 calls and 2,907 puts).

    Traders awaited the U.S. export sales-shipments report for the week ended March 8, scheduled for release by USDA at 7:30 a.m. CDT on Thursday.

    Net upland sales for shipment this season have averaged 360,500 running bales the last four weeks, up from 262,100 RB the prior four weeks, and upland shipments have averaged 365,300 RB, up from 315,000 RB. Upland net sales for 2018-19 have averaged 169,600 RB, up from 90,413 RB.

    The USDA last week raised its 2017-18 export forecast 300,000 statistical 480-pound bales to 14.8 million SB, near last season’s second largest on record of 14.92 million, with stronger global demand expected to help offset increased competition from foreign producers.

    All-cotton export commitments through the first seven months of the marketing year rose to about 14.5 million statistical bales from about 12.1 million for the corresponding period last season.

    Combined upland-Pima shipments have reached approximately 6.8 million SB, 46% of the export forecast. At the comparable point last season, shipments were 49% of final 2016-17 exports.

    Shipments, now in the middle of the peak period for U.S. cotton exports, surged during the week ended March 1 to a 12-year high of more than 550,000 RB. Strong export commitments support prospects for above-average shipments during the second half of the marketing year.

    To achieve the latest estimate, shipments need to average slightly more than 365,000 statistical bales per week. The U.S. share of the highest global trade in four years is forecast to dip slightly to 38% from last season’s six-year high of 40%.

    Meanwhile, China sold 24,300 metric tons (about 111,600 statistical bales) on the second day of its auctions of government-owned stocks, about 81% of the offering, according to the China National Cotton Information Center.

    This brought two-day sales to about 52,400 MT (around 240,700 SB), roughly 87% of the offering. The auctions of about 30,000 MT daily are scheduled to extend through Aug. 31.

    Futures open interest grew 1,278 lots to 272,732 on Tuesday, with May’s down 1,348 lots to 125,654, July’s up 864 lots to 58,426 and December’s up 1,147 lots to 70,923. Certified stocks were unchanged at 82,725 bales.

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