Harvest of short Rio Grande Valley crop wonΆt take long. Mills added to unfixed on-call December positions and producers cut theirs.
Cotton futures extended bullish momentum from this weekΆs crop and supply-demand reports to finish on a new high close for the move for the second straight session Friday.
Benchmark December closed up 153 points to 93.32 cents, in the upper quarter of its 211-point range from down 18 points at 91.61 to up 193 points at 93.73 cents. March settled up 108 points to 90.04 cents.
December widened its settlement premium to March to a new high at 328 points after trading out to 384 points. It advanced 439 points for the week, while October gained 435 points and March rose 316 points.
Volume increased to an estimated 24,500 lots from 15,177 lots the previous session when spreads totaled 4,087 lots or 27% and EFS 2,216 lots. Options volume totaled 8,576 calls and 11,006 puts.
The Corpus Christi classing office graded 15,566 bales this week to bring the total for the season to 17,758 bales. Tenderable cotton accounted for 61% for the week and 58.4% for the season.
“It wonΆt take long for the cotton harvest to happen in the Rio Grande Valley this year,” Brad Cowan, extension agent for Hidalgo County, said in a Texas AriLife Extension Service report this week.
Production in the lower valley is estimated by USDA at just 85,000 bales, down from 248,100 bales last year and 262,900 bales in 2011. The valley is the traditional source of the nationΆs first new-crop supplies.
A significant acreage didnΆt get planted or didnΆt make a stand because of drought, Cowan said. Water was available for only a single irrigation, he said, and many growers decided that wasnΆt enough to justify putting in a crop.
Luis Ribera, an agricultural economist at the Texas A&M Research and Extension Center at Weslaco, estimated in a 2012 study that lack of irrigation water and drought cost South Texas agricultural and agribusinesses nearly $400 million and resulted in the loss of almost 5,000 jobs.
Meanwhile, unfixed on-call positions in December rose by 222 lots on the mill side and fell 919 lots on the producer side last week, according to the latest data from the Commodity Futures Trading Commission.
Mills upped their unfixed holdings to 29,290 lots and producers cut theirs to 17,379 lots. The net call difference widened 1,141 lots to 17,379 lots, which amounted to 10.97% of DecemberΆs rising open interest, against 11.13% a week earlier.
The ratio of the unfixed mill position to that of producers widened to 2.46:1 from 2.19:1 the week before.
In March, mills added 443 lots and producers 129 lots, increasing the unfixed positions to 15,027 and 1,748 lots, respectively. This left mills with 8.6 contracts to price for every one by producers.
Futures open interest expanded 1,717 lots Thursday to 208,404, with DecemberΆs up 596 lots to 167,053 and MarchΆs up 1,009 lots to 30,763. Certificated stocks fell 1,340 bales to 43,000.
World values as measured by the Cotlook A Index edged up 15 points Friday morning to 96.10 cents. The premium to ThursdayΆs December futures settlement narrowed nine points to 4.31 cents. For the week, the index gained 165 points.
