Source: Source: Agfax.com

By Duane Howell DTN Cotton Correspondent

December 4, 2017 

U.S. upland classing reached 10.272 million RB, up 7.3% from 9.573 million RB a year ago. Storage deficit area declared in South Texas as result of Hurricane Harvey. Flow of cotton to market slowed. Cotton futures settled down 70 points to 34 points in 2017-18 marketing year contracts Monday, with March finishing with the biggest loss below its previous-session low.

March closed at 72.58 cents, a five-session low settlement and just off the low of its tight 85-point range from up seven points at 73.35 to down 78 points at 72.50 cents. It traded from six points shy of Friday’s high to 16 points below the low.

Talk of quieter export inquiries from the Far East from the recent strong pace as March ended Friday at its highest closing price since Sept. 5 may have contributed to the pressure along with U.S. dollar index gains.

Maturing December settled down 40 points to 75.03 cents, trading between 75 and 75.34 cents on a volume of 36 lots. Deferred contracts closed up 20 to down 27 points, with December 2018 posting the largest gain at 71.41 cents on a volume of 1,068 lots. Market volume fell to an estimated 23,380 lots from 25,999 lots the prior session when spreads accounted for 9,298 lots or 36% and EFP 90 lots. Options volume dropped to 4,708 lots (2,809 calls and 1,899 puts) from 8,261 lots (4,120 calls and 4,141 puts).

U.S. upland classing rose to 1.547 million running bales during the week ended Thursday from 1.292 million the prior week, boosting the season’s total to 10.272 million, up 7.3% from 9.573 million a year ago. The latest weekly USDA figures showed tenderable cotton at 70.3% for the week and 75.7% for the season, compared with 71.4% and 76.6% a week earlier, respectively. A year ago, 72% for the week and 71.4% for the season met tenderable requirements.

Classing of 48,226 RB of Pima, up from 45,115 RB the week before, brought the all-cotton count for the season to 10.558 million RB, up from 9.855 million RB a year ago. The USDA’s Commodity Credit Corp. determined there is a storage deficit in South Texas as a result of Hurricane Harvey. The counties included are Brazos, Cameron, Galveston, Harris, Hidalgo, Nueces, San Patricio, Webb, Wharton, Willacy and Williamson.

This determination applies only to cotton warehouses with a July 1 renewal date of the Cotton Storage Agreement and is in place until Dec. 22, USDA said. Approved cotton warehouse operators in a storage deficit area may apply to CCC for authorization to store cotton pledged as collateral for a CCC loan in specifically designated outside areas. Hurricane recovery efforts in the Houston area have led to a substantial lack of storage availability and increased trucking costs. Transportation issues have caused a slowing of the normal flow of cotton from warehouses to markets.

The CCC determines that a storage deficit exists if cotton production exceeds the combined approved inside storage capacity of warehouses with a CCC storage agreement, less carry-in stocks for the area. Later this year, as the cotton harvest continues and ginning progresses, CCC will determine if there are storage deficit areas in other states or other areas of Texas. A few gins continued operations in southern and eastern Texas last week, but the season was drawing to a close. Ginning made good progress in Oklahoma and reports indicated all gins were operating in Kansas, though some there experienced mechanical setbacks, including electronic breakdowns and fires.

The Lubbock-based Plains Cotton Growers, Inc., said in its weekly newsletter that Seth Byrd, area extension cotton specialist, estimated the overall harvest is well beyond the halfway point, though activity lags in some pockets of northern areas. Mark Brown, PCG field services director, said gins generally are pleased with their progress, except for a few mechanical issues that have caused some delays. However, module fires have been an issue this year.

Futures open interest grew 2,443 lots to 248,781 on Friday, with December’s down 61 lots to 70, March’s up 1,434 lots to 171,140 and May’s up 481 lots to 41,831. Certified stocks declined 101 bales to 47,628. (Source: Agfax.com)