By Duane Howell, DTN Cotton Correspondent
Cotton futures continued to trade in the red Monday after falling to a seven-session low in the benchmark May contract.
May hovered off 61 points to 82.53 cents at 8:02 a.m. CST, trading within a 135-point range from 83.23 to 82 cents on a contract volume of 4,246 lots. Maturing March dropped 42 points to 80.95 cents, July fell 55 points to 83.46 cents and December shed 56 points to 83.08 cents.
A winter storm moved into the Texas High Plains overnight, bringing blizzard conditions to much of the area with periods of heavy snow and strong northerly winds. Total snow accumulations up to 8 inches were expected in the Amarillo area and around 3 inches in the Lubbock area.
ChinaΆs cotton imports rose 40% in January from a year earlier to 457,475 metric tons (2.101 million 480-pound bales), the General Administration of Customs said. China is the worldΆs top cotton consumer, importer and producer.
A preliminary reading of ChinaΆs manufacturing activity in February by HSBC Corp. showed a decline to a four-month low to 50.4 on a 100-point scale on which numbers above 50 show activity expanding. The reading was down from JanuaryΆs 52.3.
Some viewed the report as a reminder of possible threats to recovery in the worldΆs second largest economy, while others said the likely was skewed by the weeklong New Year Lunar holiday, which fell in mid-February this year.
In outside markets, Dow Jones futures gained 60 points and S&P futures 8.00, while dollar index futures fell 0.330 to 81.255, crude oil gained 63 cents to $93.76 and gold gained $13.10 to $1,585.90. Corn and wheat traded lower and soybeans higher.
ChinaΆs Zhengzhou cotton futures settled lower, down 95 yuan or 0.48% in March and 40 yuan or 0.20% in May. The other contracts closed down between 20 and 60 yuan.
In U.S. cotton futures-options combined, trend-following funds bought 3,330 lots during the week ended Tuesday, boosting their net long position by 5% to 70,264 lots, according to the latest Commodity Futures Commodity Futures Commission data.
This raised their net longs to a new high since September 2010. Index funds sold a net 7,754 lots to reduce their net longs to 70,262, while traders with non-reportable positions sold a net 1,458 lots to reduce theirs to 14,859.
Commercials bought 5,883 lots, covering 2,583 shorts and adding 3,300 longs to reduce their net short position to 5,883 lots.
In futures only, non-commercials increased their net long position by 2.8 percentage points to 38.2% of the open interest.
In the U.S. market Friday, May settled with a marginal weekly loss after posting a new high for the move earlier in the week.
The May-July spread traded between premiums on July of 84 and 104 points and narrowed eight points to close at 87 on a volume of 1,324 lots, while July-December traded between premiums on July of 35 and 98 points and narrowed 56 points to settle at 37 on a volume of 535 lots.
In cash trading, grower-to-business sales fell to 1,035 bales from 4,189 bales the previous session. Prices declined to an average of 75.69 cents from 88.14 cents, reflecting a drop to 25.88 cents from 28.56 cents in premiums over loan repayment rates.
Business-to-business sales slid to 67 bales from 1,028 bales on prices averaging 61.10 cents, down from 70.87 cents, and premiums of 20.57 cents, down from 21.33 cents.
The grower sales included 1,031 bales of staples 35 or more and 4 bales of staples 34 or less, while the business sales totaled 48 bales and 19 bales, respectively.
Growers sold 590 bales from the Southeast and 445 bales from the Southwest and cotton from the Southwest made up all the business sales.
The basis on the base quality firmed 50 points in the Southeast to 350 points off May and 109 points to 739 off in West Texas.
An additional 69 March delivery notices were issued for today to bring the two-day total to 1,109.