Hurricane threat and technical action offered support. Base loan rate on U.S. 2017-crop upland cotton dropped to 49.49 cents from 52 cents for 2016 production. Texas crop 17% harvested.
Cotton futures settled on some triple-digit gains Tuesday, led among active contracts by benchmark December on a five-session high settlement.
December closed up 115 points to 69.67 cents, just off the high of its 127-point range from down four points at 68.48 to up 123 points at 69.75 cents. It posted the low in the first minutes of overnight trading.
March advanced 109 points to settle at 70.10 cents, while December 2017 gained 67 points to close at 70.04 cents.
Uncertainty about the potential crop effects of Hurricane Matthew, forecast to threaten the U.S. East Coast in coming days, and positive technical action offered support in the face of a jump in the U.S. dollar index. Gov. Rick Scott of Florida and Gov. Pat McCrory of North Carolina have declared states of emergency.
Volume quickened from a slow start to an estimated 19,105 lots from 16,656 lots the previous session when spreads accounted for 3,384 lots or 20% and EFS 177 lots. Options volume totaled 2,265 calls and 1,213 puts.
The marketing assistance loan for 2017-crop base quality upland cotton is 49.49 cents a pound, the USDA Commodity Credit Corp. has announced.
This is down from 52 cents for the 2016 crop. The loan program provides interim financing to producers so that commodities can be stored upon harvest when market prices typically are low and sold later when price conditions are more favorable, USDA said in the news release.
Base quality is color grade 41 (strict low middling), leaf grade 4, staple 34 (1-1/16 inches), micronaire 3.5-3.6 and 4.3-4.9; strength 26.0-28.9 grams per tex, and length uniformity of 80.0-81.9 percent. Premiums and discounts apply to different quality combinations on and off the base.
The 2014 farm bill established the base loan rate at the simple average of the adjusted prevailing world price for the two immediately preceding marketing years as determined by the secretary of agriculture.
The announcement is made annually on Oct. 1, prior to the next U.S. plantings. The base loan rate cannot be less than 45 cents or more than 52 cents per pound.
On the crop scene, Texas cotton was 17% harvested as of Sunday, behind 20% a year ago but even with the five-year average, according to USDAΆs weekly progress report.
Harvesting continued in the southern half of the state and was just getting underway in West Texas and the Plains. Open bolls lagged at 59%, down from 67% last year and the average.
Statewide conditions improved slightly, with good to excellent up a percentage point to 43%, fair unchanged at 38% and poor to very poor down a point to 19%. A year ago, good-excellent was 38%, fair 43% and poor-very poor also 19%.
Crop counters with USDAΆs National Agricultural Statistics Service have been in the fields collecting data for the monthly production forecast on Oct. 12.
Futures open interest dropped 385 lots Monday to 247,499, with DecemberΆs down 686 lots to 157,744 and MarchΆs up 72 lots to 55,647. Cert stocks declined 26 bales to 32,475. There were 91 newly certified bales and 117 bales decertified.
