Uncertainties regarding China’s cotton reserves policy have contributed to macro headwinds. U.S. upland classing totaled 93% of the crop estimate, with tenderable qualities accounting for 55.8%.
U.S. cotton futures slipped to the session low in the late going and closed in the red a second day Friday amid steep losses in stock indexes and concerns the economy is weakening.
- Spot March settled down 49 points to 61.41 cents, near the low of its tight 68-point range from up 12 points at 62.02 to down 56 points at 61.34 cents. It managed to finish up a point for the week, snapping a five-week string of lower closes.
- May closed down 37 points to 61.90 cents, while December dropped 24 points to settle at 62.47 cents. For the week, May lost 16 points and December fell 47 points.
- Volume declined slightly to an estimated 23,041 lots from 23,859 lots the previous session when spreads accounted for 10,948 lots or 46% and EFP 47 lots. Options volume totaled 2,856 calls and 4,214 puts.
The market will be closed Monday in observance of civil rights leader Martin Luther King Jr. Day.
Uncertainties regarding ChinaΆs cotton reserves policy have contributed to macro headwinds. Traders noted the Dow Jones Industrial Average plunged as much as 500-plus points during the cotton session and the S&P 500 hit its lowest since October 2014.
Reports have circulated that China will make a valid effort to reduce its massive stockpile, a trade analyst pointed out. China would prefer to sell its stocks in the domestic market but sooner or later may be compelled to opt for exports, he said.
Earlier, Cotton Outlook reported in a monthly review that conjecture has abounded that the Chinese New Year will be followed closely by a resumption of state reserve sales, limiting any tendency for interior asking rates to rise as a result of the short crop and tight availability of import quota.
The Chinese New Year, based on the lunar calendar, always falls between late January and mid-February and this year will be Feb. 8.
On the U.S. crop scene, upland classing slowed to 331,417 running bales during the week ended Thursday from the prior weekΆs 402,652 RB, according to the latest USDA figures.
Cotton tenderable on U.S. futures contracts totaled 50.1% for the week, down from 54.4% the previous week, and 55.8% for the season, down from 69.5% a year ago.
The USDA has classed 93% of the January upland production estimate, compared with 94% of the final upland output a year ago.
Pima classing of 15,955 RB brought the extra-long staple total for the season to 347,350 RB and the all-cotton count to 11.616 million RB, down 22% from the 14.917 million RB graded a year ago.
Futures open interest gained 886 lots Thursday to 182,553, with MarchΆs up 724 lots to 114,762 and MayΆs down 74 lots to 32,492. Cert stocks were unchanged at 64,141 bales.
