Wednesday is the first notice day for October. Producers advised on loan program requirements. Wider use of the loan expected.
Cotton futures rallied off a test of the contract low in benchmark December to close with a modest gain and snap a three-session losing streak Tuesday.
December closed with a 24-point gain to 62.83 cents, in the upper half of its 123-point range from down 53 points at 62.06 cents to up 70 points at 63.29 cents.
Thinly traded October settled on its session low at 62.93 cents, down 193 points and just 10 points over December after it traded to premiums as wide as 464 points last week. March gained 53 points to close at 62.48 cents.
Wednesday is first notice day for October. Open interest in October coming into TuesdayΆs session totaled only 105 lots (10,500 bales).
Volume slipped to an estimated 22,800 lots from 28,618 lots the previous session when spreads accounted for 6,383 lots or 22%, EFP 30 lots and EFS 25 lots. Options volume totaled 1,473 calls and 2,561 puts.
Producers have been advised to visit their local Farm Service Agency offices to minimize any disruptions in utilizing the government loan program and qualifying for marketing loan gains.
To qualify, producers of upland cotton and other commodities must file an acreage report showing crop shares, a conservation compliance form, and signify adherence to adjusted gross income (AGI) provisions.
Failures to file the necessary forms have delayed some 2014-crop cotton from entering the loan program. Weak market prices are expected to encourage wider use of the loan.
New provisions in the 2014 farm law put payment limits at $125,000 per person or legal entity. This applies to loan deficiency payments, marketing loan gains and price loss coverage (PLC) and agriculture risk coverage (ARC). Peanuts have a separate $125,000 limit.
Producers whose most recent three-year average AGI exceeds $900,000 are ineligible for those benefits. Those whose income exceeds the limit remain loan eligible but must repay the loan at principal and interest.
Incomplete and unofficial calculations for the first three days of the current program week would point tentatively to a marketing loan gain for the week beginning Friday of 0.37 of a cent.
Futures open interest expanded 995 lots Monday to 181,317, with DecemberΆs down 1,041 lots to 105,347 and MarchΆs up 894 lots to 57,398. Certificated stocks declined 1,896 bales to 18,565.
World values as measured by the Cotlook A Index fell 195 points Tuesday morning to 70.90 cents. The premium to MondayΆs December futures settlement narrowed 15 points to 8.31 cents.
