U.S. equities pared steep losses and oil rallied late in the cotton session. What happened to predictions of a wetter-than-normal winter in Texas depends upon the period involved, climatologist says. Slower weekly export sales expected.

Cotton futures fell to new contract lows and closed in the red Wednesday, even as U.S. equities sharply trimmed steep losses and oil prices rallied into the green late in the fiber crop session.

• Most-active May settled down 59 points to 57.41 cents, in the lower quarter of its 76-point range from up two points at 58.02 cents to down 74 points at 57.26 cents. It closed below the prior day’s contract low.
• Maturing March finished down 47 points to 57.70 cents, hitting a new contract low at 57.16 cents, just above the 2015 spot futures low of 57.05 set on the March 2015 contract on Jan. 23, 2015. July closed down 97 points to 57.34 cents and December settled down 108 points to 57.20 cents.
• Volume rose to an estimated 27,938 lots from 25,966 lots the prior session when spreads accounted for 7,397 lots or 28%, block trades 800 lots and EFS 10 lots. Options volume totaled 5,674 calls and 4,489 puts.

On the weather scene, many people involved in Texas agriculture, the nationΆs top cotton-producing state, have wondered what happened to the wetter-than-normal winter predicted because of El Nino.

Most of the state has been drier than normal by an inch to 3 inches the last 30 days, says a Texas Agrilife Extension Service report, citing the National Weather Service.

“ItΆs been fairly dry since the beginning of 2016,” John Nielsen-Gammon, state climatologist at Texas A&M University, acknowledges in the extension report, “but from October through December, we were generally quite wet.”

In fact, he noted, October-December rainfall totaled several inches above the average for previous strong El Nino periods.

“While weΆve had a dry winter, the combined fall and winter have been wetter than normal,” he said. “Typically, you get one or two dry months within an El Nino. ThereΆs no guarantee the whole thing is going to be wetter than average.”

The current El Nino remains strong, with no sign itΆs going to weaken until spring or summer, Nielsen-Gammon said. Also, many areas had rain the last week of February.

“I believe weΆre just going through a temporary dry stretch that is soon going to be coming to an end, particularly in western Texas over the next couple of weeks,” the climatologist said.

There have been some reports that El Nino actually is strengthening, he said, but it depends upon what metric is used.

“ItΆs gotten a little bit stronger in some ways and weaker in others,” he added. “ItΆs basically just holding its own right now.”

But there are signs of the coming demise of El Nino, he said.

“ThereΆs a lot of cold water close to the surface in the western tropical Pacific Ocean that is going to be moving eastward over the next couple of months,” he explained. “Hopefully, the cold water wonΆt take over and turn into a La Nina but next winter, because that would mean a dry year next year.”

Meanwhile, slower U.S. export sales are expected to be reported Thursday by USDA for the week ended Feb. 18 after upland sales the prior week hit a marketing year high of 308,800 running bales.

Upland sales the last four reporting weeks have averaged 229,100 RB and upland shipments have averaged 183,700 RB. The crop year high for upland shipments is 233,500 RB for the week ended Jan. 28.

Futures open interest expanded 1,979 lots Tuesday to 187,997, with MarchΆs down 139 lots to 543 and MayΆs up 1,162 lots to 117,559. Cert stocks grew 487 bales to 62,654. There were 2,115 newly certified bales and 1,628 bales decertified. Awaiting review were 9,462 bales.