Cotton Settles Lower in 2015-16 Contracts

December fell sharply prior to first notice day. Wind advisory issued for the Texas Plains. U.S.-world spread narrowed 14 points in AWP calculations. Mills priced 2,577 on-call lots in December.

U.S. cotton futures finished in the red in 2015-16 deliveries Friday as December tumbled sharply ahead of first notice day and most-active March settled on a modest loss to snap a four-day string of higher closes.

March closed down 29 points to 62.83 cents, near the low of its 67-point range from up 30 points at 63.42 to down 37 points at 62.75 cents. It traded on both sides of the prior dayΆs range and again retreated from the area of its 50-day moving average.

With first notice day looming on Monday, December settled down 154 points to 60.04 cents, trading from 61.98 to 59.82 cents. It fell to within 12 points of its contract low, set on Sept. 24.

For the week, December lost 164 points and March gained 84 points. December notices for Monday are expected to be posted by Friday night.

The December 2016 contract bucked the current-crop moves to finish with a small gain, up 15 points to 64.29 cents. It traded up to 64.52 cents, highest intraday print since Aug. 21.

Volume was estimated at 22,525 lots, down slightly from 22,827 lots the previous session when spreads accounted for 12,528 lots or 55% and EFP 489 lots. Options volume totaled 1,753 calls and 3,483 puts.

A wind advisory has been issued for the Texas High and Rolling Plains from 9 p.m. Friday to 9 a.m. Saturday. Sustained winds of 25 to 35 miles per hour with gusts near 50 mph are expected behind a strong cold front.

Producers are hopeful that a hard freeze will help to reduce the leaf and bark content that has resulted in discounts on some cotton that otherwise has shown good fiber quality.

Overnight lows at Lubbock are forecast at 30 degrees Friday, 22 degrees Saturday and 27 degrees Sunday. Wind chills are expected to fall into the teens Friday night into Saturday morning.

Sunny to mostly sunny skies are expected through Wednesday. A slight chance of showers and thunderstorms is forecast Wednesday night and Thursday in the Lubbock area.

Mostly dry conditions conducive to harvesting also are forecast for the Southeast and Delta through Thanksgiving, with rain expected to return in those areas the following weekend.

On the competitive-pricing scene, the average of the five lowest-quoted world growths for the Far East gained 29 points to 66.63 cents during the week ended Thursday, according to USDA calculations, while the lowest-priced U.S. cotton landed there rose 15 points to 73.15 cents.

The U.S.-world spread thus narrowed 14 points to 6.52 cents. The adjusted world price, reflecting transportation and quality differentials, is 46.88 cents for the program week ahead, up from 46.59 cents. This results in a marketing loan gain of 5.12 cents, down from 5.41 cents.

For qualities better than 31-3-35, the fine count adjustment for 2015-crop cotton is 100 points, up from 89 points.

Meanwhile, unpriced on-call positions in December fell 2,577 lots to 7,444 on the mill side and 1,131 lots to 5,311 on the producer side last week, according to the latest Commodity Futures Trading Commission data.

The net call difference thus declined 1,446 lots to 2,133, which was 6.4% of DecemberΆs declining open interest, up from 4.4% a week earlier. The unpriced mill position outweighed that of producers by a ratio of 1.4:1, compared with 1.56:1 the previous week.

Across the board, mills priced a net 929 lots to reduce their unpriced holdings to 67,778 lots and producers priced a net 440 lots to cut theirs to 18,976.

U.S. futures open interest fell 451 lots Thursday to 174,966, with DecemberΆs down 3,954 lots to 3,775 and MarchΆs up 1,798 lots to 1,798. Cert stocks grew 3,156 bales to 59,015. Awaiting review were 2,920 bales.

World cotton futures closed up 26 points to 71.82 cents, basis the May 2016 contract. Volume totaled 42 lots.