By Duane Howell
For A-J Media
Crop and lint quality issues amid slow harvest progress offered support as U.S. cotton futures pushed higher last week in contracts beyond the soon-to-mature December delivery.
Most-active March gained 96 points for the week ended Thursday to close at 63.12 cents, in the upper quarter of its 190-point range from 61.56 to 63.55 cents and a 13-session high finish.
March finished just above a 50 percent retracement (63.03) of its decline from the Oct. 22 high of 64.50 to the Nov. 13 low at 61.56. A close above or below either end of that 294-point range would be expected to attract some follow-through momentum.
December, where first notice arrives on Monday, eased off 26 points to finish at 61.58 cents, widening its settlement discount to March to 154 points. The widened carry prompted conjecture about whether it would attract a commercial stopper or stoppers of any December deliveries.
World cotton futures, which started trading Nov. 2 alongside U.S. cotton futures, gained 76 points for the week to settle at 71.56 cents in the May delivery, the first to trade. The premium to the U.S. May contract narrowed by 26 points to 7.69 cents.
Volume for the five-day trading period totaled only 133 lots. For perspective, daily turnovers on U.S. futures ranged from 22,455 lots to 62,774 lots and totaled 189,836 lots.
The base grade and staple for the world contract is middling (color 31) 11/8 inches (staple 36), with stipulated differentials for other qualities. For the U.S. contract, the base is strict low middling (color 41) 11/16 inches (staple 34).
Cash grower sales jumped to a crop year high of 63,514 bales on The Seam from 18,663 bales. Prices averaged 58.33 cents, up from 58.03 cents, reflecting premiums over loan repayment rates of 10.84 cents, up from 10.56 cents. Daily price averages ranged from 57.42 to 58.87 cents.
Spot market quotations on the base quality finished the program week at 125 points “on” March futures in the Southeast, 25 points “on” in the Delta, 312 points off in East Texas-Oklahoma and West Texas, 325 points off in the Desert Southwest and 225 points off in the San Joaquin Valley.
Crop quality and yield concerns continued to mount as thunderstorms moved from the Far West, through the Texas Plains and into the Delta and Southeast. Producers in the hardest-hit areas of the Southeast already had indicated that some cotton remaining on the stalk might be abandoned.
U.S. harvesting progressed six percentage points to 64 percent complete during the week ended Nov. 15, 10 percentage points behind the five-year average, USDA reported.
Harvesting edged up three points in Texas to 56 percent complete and seven points in Georgia to 54 percent, behind averages of 65 percent and 72 percent, respectively. Picking lagged the averages by 21 points at 54 percent in South Carolina and 12 points at 74 percent in North Carolina.
Delta harvesting hit 99 percent in Arkansas and Louisiana, 94 percent in Mississippi, 88 percent in Missouri and 78 percent in Tennessee.
U.S. upland classing slowed to 966,530 running bales during the week ended Nov. 12 from 982,017 bales the prior week, according to USDAΆs Agricultural Marketing Service.
This brought the seasonΆs total to 4,865,905 bales, down 24 percent from 6,369,229 bales graded a year ago. The USDA had classed 39 percent of the November upland crop estimate, compared with 42 percent of final production at the corresponding point a year ago.
Cotton tenderable on U.S. futures accounted for 57.6 percent for the week and 58.1 percent for the season, down from 73.4 percent and 73.6 percent, respectively, a year ago.
U.S. 2015-crop upland loans outstanding increased 548,379 running bales during the week ended Nov. 9 to boost the total to 1.286 million. Entries were 569,432 bales and repayments totaled 21,053 bales.
The upland cotton under loan included 86,032 bales of Form A issued to individual growers and 1,200,452 bales of Form G issued to marketing cooperatives or loan servicing agents.
On the demand front, net U.S. upland export sales for shipment this season climbed to 194,400 running bales during the week ended Nov. 12, up 52 percent from the prior week and 74 percent from the four-week average, USDA reported. Sales went to 16 destinations, headed by Turkey, Thailand, Vietnam, Malaysia and China.
Net sales of 5,300 bales for shipment next season, up from the prior weekΆs 1,100 bales, were reported for Mexico, El Salvador and Japan.
Upland shipments fell to a marketing year low of 53,800 bales, down 24 percent from the prior week and 41 percent from the four-week average. The primary destinations included Mexico, Indonesia, South Korea, China and Turkey.
Net Pima sales for shipment this season posted a marketing year high of 15,900 bales, up from the prior weekΆs 7,900 bales. Shipments of the extra-long staple cotton rose to 7,200 bales, up 47 percent from the previous week and 54 percent from the four-week average.
Combined upland-Pima weekly sales for 2015-16 of 210,300 bales were the highest of the marketing year, edging above the prior high of 209,900 bales sold during the week ended Oct. 1.
Sales averaging roughly 154,690 running bales a week now would match the USDA export forecast, while weekly shipments of approximately 225,500 bales are needed to achieve the projection.
Meanwhile, trend-following funds reduced their net longs by 10,526 lots to 22,251 in U.S. futures-options combined during the week ended Nov. 10, according to the Commodity Futures Trading CommissionΆs supplemental traders-commitments data.
They liquidated 5,600 longs and added 4,926 shorts, cutting their net longs to a five-week low. Index funds nudged their net longs up 167 lots to 65,314, while traders with nonreportable positions hiked theirs by 301 lots to 979. Commercials shaved their net short position by 10,058 lots to 93,545, covering 8,963 shorts and adding 1,095 longs.
