March reversed off a new low for the move. Decertification of 25,359 bales offered support, reducing deliverable stocks to 32,037 bales.
U.S. cotton futures reversed off a new low for the move to close ahead in spot March and snap a three-session losing streak Thursday, supported partly by a reduction in stocks in deliverable position.
- March closed up 50 points to 61.36 cents, in the upper quarter of its 85-point range from down 19 points at 60.67 to up 66 points at 61.52 cents. It touched the high in the late going, bouncing from an overnight low that was three ticks below the prior-day low at the lowest intraday price since Oct. 5.
- The reduction in certificated stocks was viewed as highlighting a tight availability of higher-grade cottons.
- May settled up 46 points to 61.91 cents, July closed up 54 points to 62.52 cents and December finished up 38 points to 61.88 cents.
- Volume rose to an estimated 32,939 lots from 28,062 lots the previous session when spreads accounted for 11,806 lots or 42%, EFP 192 lots and EFS 68 lots. Options volume totaled 2,339 calls and 3,511 puts.
Decertification of 25,359 bales reduced stocks in deliverable position for the U.S. No. 2 cotton futures contract to 32,037 bales, down from 64,340 bales coming into the month and from 57,425 bales a year ago.
Stocks certified for delivery on the world cotton futures contract declined 14,091 bales to 3,756 bales, down from 17,908 bales as of Jan. 4. All the world cert stocks from the start have been in U.S. warehouses and also are eligible for and included in totals for the No. 2 contract.
The basis quality for the world contract is higher than that for the No. 2 contract, with the former based on color 31 or middling, staple 36 or 1-1/8th inches, leaf 3, strength 27 grams per tex and mike 3.5-4.9.
Trading in the world contract has remained limited, totaling 112 lots Monday and Tuesday before turning inactive Wednesday and Thursday. Open interest coming into Thursday’s session totaled 283 lots.
The U.S. No. 2 contract — basis color grade 41 or strict low middling and staple 34 or 1-1/16th inches — doesnΆt necessarily represent the premium quality segment, a trade analyst said in a note the other day.
Color grades as low as low middling and middling light spotted are allowed to be delivered at discounts, he pointed out, along with staple lengths as short as 1-1/32nds inches.
The latest weekly report on the distribution of qualities showed Monday that middling and higher color grades accounted for 6,317 bales of cert stocks then totaling 58,627 bales and 1,682 bales stapled 1-1/8th inches or longer.
Thus far the tightness of higher qualities has been reflected mainly in the premium quality basis, with the overall market concerned about the threat of Chinese reserve stocks and a tough macro environment.
Meanwhile, the delayed U.S. weekly export report on Friday is expected by some analysts and traders to show upland sales ranging from 125,000 to 200,000 running bales. The report was rescheduled from Thursday because of a weather-induced temporary closure of federal government offices.
U.S. futures open interest increased 1,298 lots Wednesday to 194,579, with MarchΆs up 426 lots to 112,957 and MayΆs up 417 lots to 40,402.
