May hit new intraday high for move. Large unpriced on-call sales offered support and lack of notices sparked short-covering. Drought conditions persist in much of the West Texas Plains.
Cotton futures finished higher Monday as most-active May hit a new intraday high for the move and settled at a four-session high close.
The May contract settled up 95 points to 89.30 cents, in the upper half of its 253-point range from down 44 points at 87.91 to up 209 points at 90.44 cents, its highest intraday price since March 2012.
Maturing March closed up 83 points to 87.92 cents, July settled up 42 points to 88.65 cents and December edged up 11 points to 78.25 cents.
Volume rose to an estimated 24,400 lots from 20,861 lots the previous session when spreads totaled 8,835 lots or 42% and EFP 2,347 lots. Options volume totaled 3,893 calls and 2,915 puts.
Large unpriced old-crop on-call sales offered support and a lack of March delivery notices on first notice day prompted short-covering. A move toward carry last week offered holders of deliverable stocks a chance to roll March positions forward and hold onto the cotton.
The latest on-call data from the Commodity Futures Trading Commission, as reported earlier, showed mills came into last week with unpriced positions in May and July totaling 44,001 lots or 4.4 million bales. This amounted to 34% of the May-July open interest and the net call difference (40,089 lots) was 31.1%.
Meanwhile, moderate to extreme drought has persisted in much of the West Texas Plains, with no precipitation foreseen in the Lubbock area through the remainder of the week.
This would leave accumulated moisture from October through February at 2.45 inches, 2.49 inches or 50.4% below normal and down from 3.2 inches during the corresponding period ahead of the 2013 crop.
Subsoil moisture for the next cotton crop — the traditional optimum planting period opens May 5 on the Texas High Plains — typically begins to accumulate in October.
The High and Rolling Plains, which produced 80% of the estimated 2013-14 Texas crop and 27% of the U.S. upland output, is in the fourth year of drought. Precipitation at Lubbock measured a record low of 5.86 inches in 2011, 11.43 inches in 2012 and 12.61 inches in 2013, compared with an annual normal of 19.12 inches.
A winter storm brought widespread rain, freezing rain and snow across much of the region in December. Some locations in the southern High Plains and Rolling Plains received more than an inch of precipitation.
Then Lubbock got no precipitation in January — not even a trace — and has received only 0.16 of inch this month for a total since Dec. 1 of 0.76 of an inch, 1.26 inches below normal. However, the winter months normally are dry and rainfall probabilities begin to improve in March.
Elsewhere in Texas, fieldwork was active last week ahead of planting in the Rio Grande Valley, Coastal Bend and around Corpus Christi, according to a review by the cotton division of USDAΆs Agricultural Marketing Service.
No planting was reported as producers waited for calmer, warmer weather. Producers were encouraged because of subsoil moisture conditions, though the topsoil had begun to dry.
Futures open interest fell 2,967 lots Friday to 163,279, with MarchΆs down 3,731 lots to 625 and MarchΆs down 401 lots to 102,780. Certificated stocks declined 79 bales. No cotton awaited review.
World values as measured by the Cotlook A Index gained 75 points Monday morning to 94.65 cents. The index premium to FridayΆs May futures settlement widened five points to 6.30 cents.
