By Duane Howell

Liquidation, favorable crop prospects and a technical break have contributed to pounding cotton futures to new seasonal lows.

Most-active December fell 250 points for the week ended Thursday to close at 74.63 cents, its lowest finish since June 2012 and down 1,011 points, or 11.9 percent, from its May 8 high.

December found some scale-down trade buying around its low of 73.71 cents, just below the 73.79 low posted by the December 2013 contract in late November before it expired.

Maturing July lost 799 points, or 9 percent, to settle at 80.37 cents, its lowest close since early December. It finished down a whopping 1,473 points, or 15.5 percent, from its May high.

July plunged the 400-point daily limit in the fading minutes of the day before first notice day and plummeted 691 points, or 7.1 percent, the next day — the largest daily loss since the massive exodus of 2011 — when trading limits were removed on the spot contract. Daily trading limits now have reverted to 300 points beyond the maturing delivery.

Prices have gyrated wildly around each July maturity period since futures soared to an all-time high of $2.27 a pound in March 2011, damaging cotton in its battle for fiber markets with synthetics.

Open interest fell 23,265 lots to 144,552, lowest since 2011, led by JulyΆs 23,190-lot decline to 2,861 going into ThursdayΆs session. Deliverable stocks grew 21,071 bales to 448,798, largest since July, with 17,971 bales awaiting review.

July delivery notices for the first three days of the notice period through Thursday totaled 637 lots, or 63,700 bales. Newedge USA and Term Commodities emerged as the major stoppers.

Traders looked ahead to USDAΆs U.S. planted acreage report on Monday amid expectations for the July supply-demand report to show a reduction in abandonment from the June estimate and a higher production forecast.

U.S. crop ratings held steady on balance during the week ended June 22, with excellent down a percentage point to 12 percent, good up three points to 41 percent, fair down two points to 35 percent, poor down a point to 8 percent and very poor up a point to 4 percent.

The USDAΆs crop progress report showed much-improved conditions from a year ago when excellent was 8 percent, good 35 percent, fair 34 percent, poor 17 percent and very poor 6 percent. The DTN cotton crop index was unchanged from a week ago at 137, up from 99 a year ago.

Cotton in Texas was 40 percent good to excellent and 19 percent poor to very poor, against 25 percent and 37 percent last year, respectively.

U.S. squaring advanced 11 points to 25 percent, up four points from a year ago but two points behind the five-year average. Boll setting at 3 percent was even with a year ago but behind 6 percent on average.

Cotton generally has been growing slowly and is behind normal thus far on the Texas High Plains, says Apurba Barman, extension entomologist at Lubbock.

The good news is that the crop hasnΆt experienced significant thrips populations, he said in a Texas AgriLife Extension Service report. Thrips pressure has been negligible in cotton south of Lubbock.

“Our scouting efforts indicate that thrips numbers in cotton are really low and much below economic threshold levels, even in cases where cotton is planted next to wheat fields,” he said.

However, moderate thrips numbers have been noted in some areas of the northern High Plains, such as in Hale and Swisher counties, and producers have applied insecticides, the cotton entomologist added.

Although seeds with insecticide treatment should protect cotton plants from thrips for two to three weeks, prolonged periods to germinate and attain desired growth may reduce this “period of protection” and allow cotton to become vulnerable to injury, Barman said.

Cooler temperatures following recent rains facilitated development of seedling diseases and poor root and upper plant growth. Other cotton has been recovering from hail and blowing sand and some fields have been replanted, either back to cotton earlier or lately to alternative crops.

Once cotton moves beyond the four-to-five true leaf stage, plants can sustain thrips injury without significant economic loss, Barman said.

Weeds are growing profusely, he said, noting that some weeds — such as Russian thistle and sliver leaf nightshade — can attract other such insect pests as fleahoppers and Lygus bugs into cotton fields.

As cotton enters the squaring stage, producers must keep an eye on square retention, the entomologist pointed out. Cotton fleahoppers will be of primary concern during early squaring of the fruit-set stage.

While many producers generally wouldnΆt turn down another rain, they welcomed forecasts for clearing, warmer weather late in the week. The crop needed sunshine and heat units to achieve optimum benefits from recent widespread rainfall. Moisture or lack of it year-in, year-out is the biggest yield-determining factor in this semi-arid region.

Statewide, 15 percent of the cotton was squaring, behind 18 percent last year and 19 percent on average.

Weak U.S. weekly export sales weighed on sentiment, though a sizable downturn had been expected. Sales of 4,600 bales for shipment this season and 24,100 bales for next season were down from the prior weekΆs 155,200 bales and 103,500 bales, respectively.

Shipments edged up to 138,100 bales from 132,000 bales the week before and were near the weekly average of roughly 140,000 bales needed to reach the USDA estimate.

Meanwhile, trend-following funds bought a net 1,372 lots — they covered 1,720 shorts and liquidated 348 longs — to raise their net long position by 9.8 percent to 15,406 lots during the week ended June 17.

Index funds bought 1,581 lots to boost their net longs to 63,690 lots, while small traders sold 1,020 lots to cut theirs to only 130 lots, according to government data. Commercials sold a net 1,933 lots, liquidating 9,724 longs and covering 7,791 shorts to hike their net short position to 79,225 lots.