Market viewed as vulnerable to spec long liquidation. U.S.-China trade tensions kept traders on edge. Weekly export sales-shipments will be weighed against USDA estimate. China’s February imports fell 26% from a year ago. Sixty Texas counties designated as drought disaster areas.
Cotton futures fell to triple-digit old-crop losses on this next-to-last trading day of the month Wednesday, with May finishing below lows of the prior three weeks.
May lost 128 points to settle at 80.74 cents, just off the low of its 146-point range from up 11 points at 82.13 to down 135 points at 80.67 cents. It finished on its lowest close since Feb. 22.
July closed down 126 points to 81.18 cents, trading within a 138-point range from 82.52 to 81.14 cents. December dropped 63 points to close at 76.99 cents, two points off the low of its 53-point range.
Volume increased to an estimated 33,300 lots from 23,261 lots the prior session when spreads accounted for 10,464 lots or 45%, EFS 161 lots and EFP 124 lots. Options volume rose to 8,631 lots (3,413 calls and 5,218 puts) from 6,499 lots (5,362 calls and 1,137 puts).
The market was seen as vulnerable to speculative long liquidation selling as prices slipped ahead of the U.S. prospective plantings report and U.S. weekly export sales-shipments data on Thursday. U.S.-China trade tensions kept traders on edge.
Managed money funds sold a net 2,146 lots during the latest reporting week, liquidating 2,507 longs and covering 361 shorts, traders-commitments data reported by the Commodity Futures Trading Commission showed. They still were net long 82,899 lots in futures-options combined.
In futures alone, non-commercials sold 4,703 lots, liquidating 2,742 longs and adding 1,961 shorts to reduce their net longs to 100,626 lots. They were net long 37% of a little-changed open interest, down from 38.7%.
The export sales-shipments report will provide an updated comparison with USDA’s export forecasts. Net upland sales the prior reporting week ended March 15 were 338,400 running bales and upland shipments were 425,100 RB.
Upland sales the last four weeks have averaged 334,400 RB and shipments have averaged 410,600 RB, compared with the prior four-week averages of 348,900 RB and 367,413 RB, respectively. Cumulative sales are 103% of the USDA export forecast, up from the five-year average of 92%.
Shipments, though 401,500 RB behind year-ago exports, have quickened to above the pace needed to reach the USDA projection. Strong commitments support prospects for above-average shipments the remainder of the season.
Earlier this week, customs figures showed China’s cotton imports fell last month to 102,675 metric tons (451,577 statistical bales), down 26% from a year ago. Imports for January-February combined were 236,400 tons (1.086 million bales), down 6.9%.
Imports for the first seven months of the marketing year totaled about 3.046 million bales, about 60% of the USDA estimate. As of March 15, Vietnam had edged ahead of China as the top export market for U.S. cotton this season on purchases of 2.518 million bales and 2.476 million bales, respectively.
Meanwhile, USDA has designated 60 counties in Texas as primary natural disaster areas because of losses and damages caused by drought. Farmers and ranchers in 19 contiguous Texas counties also qualify for natural disaster assistance.
The designation also covers contiguous counties and parishes in Arkansas, Louisiana, New Mexico and Oklahoma.
Futures open interest expanded 1,812 lots to 278,286 on Tuesday, with May’s down 339 lots to 113,091, July’s up 1,442 to 72,762 and December’s up 652 lots to 73,302. Certified stocks remained at 60,218 bales.
