Steep Wall Street losses weighed on sentiment as trade war rhetoric reheated. Still no rain is foreseen in the Texas High Plains cotton area as a cold front approached. The U.S. Far East premium narrowed a bit.
Cotton futures settled narrowly mixed Friday, chopping back and forth within the trading ranges established in the overnight session as trade war rhetoric reheated.
May eased three points to close at 82.54 cents, slightly below the midpoint of its 166-point trading range from down 77 points at 81.80 cents to up 89 points at 83.46 cents. It gained 108 points for the week.
July eked up three points to settle at 82.18 cents, trading within a 160-point range from 81.44 cents to 83.04 cents. December managed a seven-point gain to close at 77.94 cents, confined to a 64-point range from 77.50 cents to 78.14 cents. For the week, July edged up 38 points and December 21 points.
Steep losses in U.S. stock markets weighed on cotton sentiment. China warned it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on President Donald Trump’s threat to slap tariffs on an additional $100 billion of Chinese goods.
Volume slipped to an estimated 59,800 lots from 69,092 lots the prior session when spreads accounted for 36,842 lots or 53% as the Goldman Sachs index fund roll of longs from May kicked in for a five-session run. Options volume dropped to 9,442 lots (5,717 calls and 3,725 puts) from 15,649 lots (12,874 calls and 2,275 puts).
Traders are keeping an eye on the droughty Texas High Pains cotton area where still no rain in sight the next 10 days as a cold front approached the region Friday. Some producers typically like to plant a few early cotton acres later in April if conditions are favorable with sufficiently warm, moist soils and winds are still.
Talk circulated amid the trade war threat that additional import tariffs on U.S. cotton, if actually implemented, might result in other countries, such as Vietnam, taking up the slack with “extra” purchases of the U.S. raw fiber crop and reselling it to China.
An apparent tightness among exporting countries of available high-grades prior to the movement to market of new-crop supplies and competitive prices have made for strong demand for U.S. cotton.
For the marketing week ended Thursday, the average of the five lowest-priced world growths for the Far East dropped 85 points to 89.08 cents, according to USDA calculations, while the lowest-quoted U.S. cotton slipped 78 points to 89.42 cents.
The U.S. premium thus narrowed seven points to 0.34 of a cent. For the program week that began Friday, the adjusted world price is figured at 72.03 cents, down from 72.88 cents. This of course leaves the marketing loan gain at zero.
The fine count adjustment for qualities better than 31-3-35 is 1.06 cents per pound for 2017-crop cotton, down from 1.15 cents. This reflects differences in premiums in U.S. and international markets.
Certified stocks grew 10,572 bales on Thursday to 67,797, including additions of 8,808 bales at Dallas-Fort Worth and 1,765 bales at Memphis. Open interest gained 1,358 lots to 275,868, with May’s down 5,391 lots to 92,038, July’s up 4,197 lots to 83,438 and December’s up 2,235 lots to 77,755.
