Unwanted rains loom on open cotton in the Delta and Southeast. Heat facilitates crop maturity on the Texas Plains. Global cotton futures contract planned for launch by ICE early next year.
Cotton futures reached a new six-week high Thursday amid forecasts for unwanted rains this weekend into early next week in the Delta and Southeast.
Benchmark December settled up 57 points to 87.44 cents, in the upper half of its 96-point range from down five points at 86.82 to up 91 points at 87.78 cents. This was a new high close since Aug. 20. March closed up 58 points to 87.37 cents.
Volume increased to an estimated 17,900 lots from 11,214 lots the previous session when spreads accounted for 3,618 lots or 32%. Options volume totaled 3,519 calls and 5,797 puts.
Tropical Storm Karen, the 11th named storm in the Atlantic this year, was expected to strengthen into a hurricane by Friday, with weak hurricane conditions possible for parts of the Gulf Coast by Saturday morning.
The National Hurricane Center issued a hurricane watch from Grand Isle, La., to Indian Pass, Fla. A tropical storm watch also was in effect for parts of the Louisiana west of Grand Isle.
Landfall appeared most likely near Mobile, Ala., late Saturday night or early Sunday morning, forecasters indicated. The storm then is expected to turn northeasterly on a path from Alabama to Virginia.
The main crop threat at the moment appeared to be from rain, though some winds also were considered possible. The relatively fast-moving storm was expected to douse interior crop areas with 1 to 3 inches of rain, with some locally heavy 5 inches, and dump 3 to 8 inches on coastal areas near the point of landfall.
Lint quality would be expected to bear the brunt of the effects on cotton, affected also for better or worse by subsequent weather.
Open bolls in the Southeast as of Sunday included 57% in Alabama, 66% in Georgia, 71% in North Carolina, 56% in South Carolina and 78% in Virginia. No more than 2% had been harvested in any of those states.
In the Delta, open bolls totaled 86% in Arkansas, 95% in Louisiana, 74% in Mississippi 29% in Missouri and 36% in Tennessee. Harvesting ranged from 5% completed in Arkansas to 30% in Louisiana.
Elsewhere, near-record high temperatures under sunny skies in the middle 90s sped crop maturity this week on the Texas High Plains ahead of a cold front expected to drop nighttime lows into the 40s this weekend at Lubbock and daytime highs into the upper 60s to middle 70s. A quick warming into the lower 80s is expected.
Meanwhile, the IntercontinentalExchange Inc. (ICE) plans to launch the first global cotton futures contract early next year alongside its existing U.S. futures contract, Reuters reported.
Foreign and U.S. cotton will be accepted for delivery at multiple locations, including the United States. Other origins and locations are yet to be finalized. The current contract is a global pricing mechanism but accepts only U.S. cotton.
The United States has fallen to third in the world in cotton production behind China and India but remains the worldΆs top cotton exporter.
Futures open interest expanded 2,135 lots Wednesday to 205,751, with DecemberΆs up 1,175 lots to 130,542 and MarchΆs up 729 lots to 58,941. Certificated stocks remained at 11,909 bales, with 9,504 bales awaiting review.
World values as measured by the Cotlook A Index gained 25 points Thursday morning to 92.65 cents. The premium to WednesdayΆs December futures settlement narrowed two points to 5.78 cents.
