Cotton Settles Sharply Lower in March
U.S. upland classing reached 5.863 million bales. Harvest advanced slowly amid intermittent showers in the lower Southeast. Some Delta gins cut schedules because of inaccessible modules. Regrowth remained problematic in the West Texas Plains.
U.S. cotton futures fell to a steep loss in most-active March Monday, extending the previous sessionΆs outside-range reversal to the downside.
March closed down 123 points to 61.60 cents, its lowest finish since Oct. 9 and near the low of its 155-point range from up 17 points at 63 cents to down 138 points at 61.45 cents. Its inability to close above 63 cents after a series of intraday probes into that area encouraged selling.
Maturing December edged up 12 points to settle at 60.16 cents, the only contract to close on the plus side.
Volume increased to an estimated 35,200 lots from 22,525 lots the previous session when spreads accounted for 10,817 lots or 48% and EFP 808 lots. Options volume totaled 3,517 calls and 2,778 puts.
U.S. upland cotton classing of 998,489 running bales during the week ended Thursday boosted the seasonΆs total to 5.863 million RB, down 24% from 7.713 million RB graded a year ago, according to the latest data from USDAΆs Agricultural Marketing Service.
Cotton tenderable on U.S. futures contracts dropped to 55.4% for the week and 57.6% for the season, compared with 73.0% of the total graded a year ago. Classing of 57,600 RB of Pima cotton brought the extra-long staple total for the season to 195,737, down from 251,815 a year ago.
Harvesting advanced slowly across the lower Southeast, AMS reported in a weekly review. Widespread intermittent showers delayed fieldwork and overcast conditions prevented many fields from drying enough to support machinery. Producers welcomed sunny, breezy conditions late in the period, which helped soft fields to firm and to bleach out damp cotton.
Cotton seeds sprouting in the boll continued to be reported in some areas of South Georgia and Florida.
In the upper Southeast, sunny and fair conditions allowed harvesting to advance in drier fields. Producers in South Carolina attempted to salvage cotton, but conditions remained saturated in many areas and machinery got stuck. Growers expect lower grades and yields as they continue to access damage from recent flooding.
Reports of hard lock and boll rot came from North Carolina where many areas experienced extended periods of overcast conditions and drizzle. Monetary losses in the Carolinas because of deteriorating lint quality and yield losses are expected to be significant.
Accumulations of up to 6 inches of unwelcomed rains were reported in the North Delta. Many producers completed harvesting in Arkansas between rain events, but the additional moisture hampered efforts in Missouri and Tennessee. Some gins operated on reduced schedules because of a shortage of accessible modules.
Wet, cool conditions also dominated weather in the South Delta. Field operations were at a standstill in Mississippi. Producers hoped for clear, breezy conditions to dry fields and fluff the remaining cotton.
Widespread rainfall continued to delay harvesting and ginning in the Texas Blackland Prairies. Some damage was so severe that fields were abandoned. The moisture will be beneficial for next season.
Rain, hail and strong winds delayed harvesting early in the period in the West Texas Plains. Gins continued processing modules on their yards. Most gins were working two shifts. Regrowth remained problematic.
U.S. futures open interest declined 1,695 lots Friday to 173,525, with DecemberΆs down 3,089 lots to 686, MarchΆs up 162 lots to 131,840 and MayΆs up 1,032 lots to 23,417.
Cert stocks dropped 66 bales to 58,949. There were 72 newly certified bales, 138 bales decertified and 2,747 bales awaiting review. Fifty-five percent of the stocks, 32,882 bales, were 2014-crop cotton which would incur a two-cent penalty if stopped on the December contract and tendered on March. The stocks included 25,842 bales of 2015-crop cotton and the remainder came from older crops.
World cotton futures closed down 157 points, basis May 2016. This narrowed the premium over the U.S. May contract by 37 points to 7.77 cents. Only six WCT lots traded.
