Heavy spread trading noted. Strong cold front, gusty winds and light drizzle expected to be followed by sunny to mostly sunny skies on the Texas High Plains. Crop estimate shaved in the High and Rolling Plains.
Cotton futures surged sharply higher in soon-to-mature December, possibly fueled in large measure by short-covering, and settled in the upper half of the dayΆs range at a 10-session high close in heavy trading Tuesday.
December settled up 91 points at 77.88 cents, trading within a 156-point range from down nine points at 76.88 to up 147 points at 78.44 cents and finishing at its highest close since Oct. 29. It traded intraday nine points over March. First notice day is a week from Friday.
March eked out a two-point gain to settle at 78.22 cents, in the lower half of its 106-point range from 77.87 cents, slightly below the prior-session low, to 78.93 cents, shy of MondayΆs high. Spread activity jumped. Traded contracts beyond March closed with slight losses.
Volume leaped to an estimated 64,100 lots from 46,449 lots the previous session when spreads totaled 32,738 lots or a whopping 70%, EFS 3,779 lots and EFP 56 lots. Options volume totaled 2,539 calls and 1,268 puts.
On the crop scene, a strong cold front moved into the Texas High Plains overnight accompanied by gusty winds — wind chill values were in the teens — and patches of light, freezing drizzle.
Clearing later in the day and forecasts for sunny to mostly sunny skies the rest of the week in the Lubbock area were expected to allow a quick resumption of the cotton harvest. A low of 24 degrees is forecast at Lubbock tonight. Another hard freeze would be generally welcomed.
Some fields were reported to have needed the hard freeze at midweek last week when temperatures fell into the high teens to 20s in the region, helping to facilitate plant dry-down and limit regrowth prior to stripper harvesting. Defoliants were sprayed in the southern Rolling Plains.
Industry people estimated roughly 20% of the crop had been harvested. Some gins hadnΆt started operations, while others added night shifts. Sample receipts increased and shift work expanded at the Abilene, Lamesa and Lubbock classing offices.
Under favorable weather, the harvest could be far along by Thanksgiving or the end of the month, industry sources say, and perhaps nearing the end of the row shortly thereafter.
Production on the High Plains is estimated at 2.445 million bales, down 55,000 bales from the September projection of the Texas field office of USDAΆs National Agricultural Statistics Service. The estimate is down 17% from last seasonΆs 2.947 million bales.
Yields are projected at an average of 652 pounds per harvested acre, up from 608 pounds last year. Acres for harvest remained at 1.8 million, reflecting abandonment of 52% off the planted area of 3.76 million acres.
The crop estimate in the adjoining Rolling Plains dropped 20,000 bales from September to 835,000 bales but is up from last yearΆs 531,300 bales.
Combined, the High and Rolling Plains output of 3.28 million bales is expected to account for 80% of the Texas crop of 4.1 million bales.
Futures open interest fell 3,342 lots Monday to 179,453, with DecemberΆs down 9,996 lots to 54,979 and MarchΆs up 5,450 lots to 91,484. Certificated stocks grew 4,597 bales to 181,132. Awaiting review were 46,840 bales.
World values as measured by the Cotlook A Index fell 20 points Tuesday morning to 84.75 cents. The premium to MondayΆs futures settlements narrowed 29 points to 7.78 cents over December and widened 24 points to 6.55 cents over March.