Howell: Cotton prices move sideways as delivery period looms Monday

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Consolidative-type, sideways price action prevailed in cotton futures as traders tweaked positions in abbreviated trading last week ahead of first notice day for December deliveries.

Most-active March eked up two ticks at midweek from the prior calendar week’s finish, settling at 72.66 cents, while spot December shed 35 points to 72.38 cents. March backed off after reaching its 50-day moving average but had a closing range for the period of only 60 points.

The market was closed Thursday for Thanksgiving and was to trade a shortened session Friday. First notice day is Monday. Steady growth in certificated stocks has indicated deliveries will be made. The question is whether a strong stopper or stoppers will emerge.

Cash grower-to-business sales totaled 83,900 bales for the four-day period on The Seam, down from the prior week’s five-day, marketing year high of 97,792 bales.

Prices advanced 113 points to average 67.39 cents, reflecting a 117-point gain to 13.77 cents in premiums over loan repayment rates. Only 32 points separated the high-low daily averages from 67.22 to 67.54 cents.

A Memphis-based merchant bid actively for physical supplies in country markets, sources said.

Support in futures stemmed partly from the largest U.S. 2012-13 all-cotton export sales of the season of 411,100 running bales reported for the week ended Nov. 8. The sales were up 52 percent from the prior week.

And large additional sales believed consummated at a Cotton Council International and Cotton Inc. conference, Nov. 12-16 in Rancho Palos, Calif., were expected to show up in USDA sales reports in coming weeks.

The seventh biennial Sourcing USA Summit, conducted in cooperation with USDA, attracted about 400 delegates from 23 countries, including representatives from the cotton industry’s top tier textile manufacturers and merchants along with companies and organizations integral to the global cotton supply chain.

Opening remarks by National Cotton Council Chairman Chuck Coley reiterated the continuing commitment of U.S. growers to supply mill customers and the entire supply chain with reliable, quality cotton, the NCC said in a report.

The pledge was echoed by growers attending the four-day event, which closed Friday. The summit has been conducted biennially since 1999 in an effort to increase cotton exports and further develop that market, which is expected to account for 77 percent of the U.S. offtake this season.

Panel discussions and presentations offered perspectives on weather; cotton’s competitors in the commodity and textile fiber arenas; the global economy; and changing manufacturing, retail and consumer landscapes.

Craig Solberg, a senior meteorologist at Freese-Notis Weather, explained cyclical weather patterns and suggested that the current drought conditions in the U.S. High Plains might continue five to 10 years.

This was tempered somewhat by Doug Rushing, director of global industry affairs at Monsanto, who cited emerging developments by his company for cotton and corn varieties with enhanced drought tolerance.

On the U.S. crop scene, harvesting advanced nine percentage points during the week ended Nov. 18 to 84 percent complete, USDA reported, a point behind a year ago but seven points ahead of the five-year average.

The harvest reached 80 percent done in Texas, 15 points ahead of the average, which was the biggest margin of any of the bigger cotton states, and 73 percent in Georgia, up three points from the 2007-11 average.

Only light, spotty rainfall across the Texas High Plains since a near-record early freeze in October has allowed the harvest there to move at a torrid pace. Some gin yards are full of modules and covered modules in fields are common.

The harvest pace exceeded state averages everywhere except by nine points at 55 percent in Arizona, five points at 78 percent in North Carolina and eight points at 73 percent in South Carolina.

Upland classing increased to 1,510,639 running bales during the week ended Nov. 15, raising the total for the season to 8,847,635, down 3 percent from 9,144,635 bales graded a year ago.

Tenderable cotton totaled 60.9 percent for the week and rose to 55.3 percent for the season from 54.1 percent a week earlier. A year ago, tenderable cotton for the season totaled 67.2 percent.

Classing of 66,132 bales of Pima brought the all-cotton count for the season to 9,083,747 running bales, down from 9,327,679 a year ago. Around 54 percent of the estimated all-cotton crop has been classed.

Separately, USDA reported that U.S. all-cotton under loan from the 2012-13 production jumped 962,308 bales during the week ended Tuesday on entries of 1,379,571 bales and repayments on 417,263 bales.

This boosted loans outstanding to 2,469,958 bales, including 368,621 bales of Form A loans issued to individual growers and 2,101,337 bales of Form G loans issued to marketing cooperatives or loan servicing agents.

Outstanding all-cotton loans from the 2011-12 output fell 29,305 bales to 37,015. Thirty-four bales were forfeited.

Meanwhile, trend-following funds sold 12,625 lots in futures with options during the week ended Nov. 13 to flip to net short 12,445 lots from net long 180 lots, according to the latest traders-commitments data from the Commodity Futures Trading Commission.

Index funds bought a net 3,346 lots to boost their net longs to 70,171 lots, while non-reportable traders sold a net 591 lots to shave theirs to 922 lots.

Commercials bought a net 9,869 lots, covering 41,823 shorts and liquidating 31,954 longs. This reduced their net short position to 58,684 lots, smallest since Dec. 27, 2011.

The report followed the Nov. 9 expiration of December options, which resulted in some data divergence. In futures only, non-commercials bought a net 5,339 lots to cut their net shorts to 7,783 lots. They pared their net shorts by 2.3 percentage points to 4.2 percent of the open interest.

Source: lubbockonline.com

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