Old-crop contracts reversed off triple-digit gains. Large unpriced old-crop imbalance reported after fixations. Upland loans outstanding declined 205,421 RB.
Cotton futures reversed off as much as triple-digit old-crop gains to close lower Monday, with heavy stock market losses weighing on sentiment amid growing global trade tensions.
Spot May settled down 49 points to 80.97 cents, just off the low of its 179-point range from up 125 points to 82.71 cents — a three-session high — to down 54 points at 80.92 cents.
July dropped 53 points to 81.27 cents, also just off the low of its 164-point range from 82.88 to 81.24 cents. December closed down 24 points to 77.49 cents, trading within a 50-point range from 77.95 to 77.45 cents.
Economically sensitive cotton appeared to have been caught in the red wave, which saw Dow Jones Industrial Average trading down more than 700 points during the fiber crop session.
China over the weekend raised tariffs by up to 25% on 128 U.S. products, escalating a dispute between the world’s biggest economies in response to U.S. duties on imports of aluminum and steel. Cotton wasn’t included but nevertheless lost ground, as did soybeans and corn.
Volume slipped to an estimated 30,042 lots from 36,213 lots the prior session when spreads accounted for 15,865 lots or 44%, EFS 1,264 lots and EFP 268 lots. Options volume increased to 12,848 lots (10,966 calls and 1,882 puts) from 8,957 lots (3,500 calls and 5,457 puts).
A large imbalance still outstanding in unpriced old-crop on-call positions coming into last week’s holiday-shortened trading week may have helped to underpin gains in the early going.
Mills priced 4,127 lots in May and July to reduce their unpriced old-crop sales to 75,957 lots, according to the latest weekly call data reported by the Commodity Futures Trading Commission, while producers priced a net 235 lots to shave theirs to 7,381 lots.
The net call difference declined 3,892 lots to 68,576, which was 37.5% of the declining old-crop open interest, down from 39.2%. Unpriced mill positions outweighed those of producers by 10.29:1.
Across the whole market, mills priced a net 1,464 lots, reducing their unfixed position to 159,172 lots, and producers added 503 lots to lift theirs to 42,156 lots. The net call difference of 117,016 lots, down 1,967 lots, represented 42.7% of the open interest, down from 43.7%.
Meanwhile, U.S. 2017-crop upland loans outstanding declined 205,421 running bales to 2.913 million RB during the week ended last Monday, according to the latest USDA figures.
Repayments were made on 242,853 RB and entries were 37,432 RB. Loans outstanding included 226,335 RB in Form A issued to individual growers and 2.691 million RB in Form G issued to marketing cooperatives or loan servicing agents.
Futures open interest increased 1,848 lots to 281,037 on Thursday, with May’s down 1,086 lots to 111,193, July’s up 1,664 lots to 75,185 and December’s up 691 lots to 74,150. Open interest rose by 6,752 lots from the prior week. Certified stocks were unchanged at 57,224 bales, down from 6,218 bales a week earlier.