May completed a bearish weekly reversal. U.S. upland classing reached 99% of the crop estimate. Cotton classed in Texas indicated the state crop estimate has been understated. Mills priced a total of 1,916 lots.
Cotton futures closed on triple-digit old-crop losses Friday as most-active May completed a bearish weekly reversal on heavy volume ahead of a three-day weekend.
The May contract shed 125 points to close at 75.52 cents, around the lower quarter of its 188-point range from up 16 points at 76.93 to down 172 points at 75.05 cents. It hit a new contract high of 78.45 cents on Monday but finished below last weekΆs low.
Spot March lost 153 points to settle at 73.48 cents. It broke through support at 75 cents and finished on its lowest close since Jan. 20. First notice day is on Wednesday. July settled down 113 points at 76.47 cents and December closed down 57 points at 73.76 cents.
For the week, the market lost 234 points in March, 157 points in May, 147 points in July and 34 points in December.
A continued buildup in stocks in deliverable position ahead of first notice day for March on Wednesday likely contributed to the pressure.
Broad weakness in commodities also may have weighed on cotton sentiment. Grains and soybeans weakened amid favorable weather in South America and apparently buying slowdown by commodity funds. U.S. dollar index futures traded up 0.455 to 100.885 on an inside day around the time cotton closed.
Volume increased to an estimated 58,204 lots from 53,380 lots the previous session when spreads accounted for 37,836 lots or 71%, EFS 1,236 lots and EFP 495 lots. Options volume climbed to 12,408 lots — 10,013 calls and 2,395 puts — from 3,302 lots.
On the U.S. crop scene, classing of 182,242 running bales of upland cotton during the week ended Thursday brought the total for the season to 15.811 million RB.
ThatΆs 99% of the USDA upland crop estimate and up 31% from 12.026 million RB graded through Feb. 18 last year. Tenderable cotton for the season at 70% was up from 55.4% a year ago.
Classing of 10,268 RB of Pima brought the extra-long staple total for the 2016-crop to 192,510 RB and the all-cotton count to 16.332 million RB. A year ago, all-cotton classing totaled 12.441 million RB.
Of the latest weekly upland classing run, 141,691 RB came from Texas, hiking the state total to 7.71 million RB, up from 5.575 million RB graded a year ago. This indicates the upland crop estimate for Texas of 7.8 statistical 480-pound bales has been understated.
Meanwhile, latest on-call data, reported by the Commodity Futures Trading Commission after the close Thursday, showed mills priced a total of 1,916 lots last week and producers added 2,006 lots.
Unpriced positions declined to 119,027 lots on the mill side and rose to 30,706 lots on the producer side. The net call difference narrowed by 3,922 lots to 88,321, 31% of the open interest. Mills had 3.88 unpriced contracts to every one held by producers.
In the 2016-17 contract months, millsΆ unfixed positions were 17,833 lots in March, 39,902 lots in May and 34,639 lots in July, while producersΆ were 4,275 lots, 3,977 lots and 2,108 lots, respectively. In December, producers added 1,102 lots and mills added 232 lots.
Futures open interest declined 3,602 lots to 275,264, with MarchΆs down 14,393 lots to 19,452 and MayΆs up 8,900 lots to 159,697 lots. Cert stocks grew 6,470 bales to 306,705. Awaiting review were 5,804 bales — 3,692 at Dallas-Fort Worth, 817 at Galveston and 1,295 at Memphis.
