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Weekly Cotton Comments                 10/23 05:18

   Cotton Finishes Highest Since Jan. 22 

   Export sales rose to a five-week high; shipments lagged the pace needed to 
make the estimate. U.S. crop is 34% harvested; classing is down 46% from last 
year. Upland 2020-crop under loan dipped to 258,876 RB. Hedge funds and small 
specs boosted net longs to a new two-year high. Unpriced December mill sales 
fell 1,030 lots. 

Duane Howell
DTN Contributing Cotton Analyst

   A breakout above the prior October high in overnight trading last Friday 
spurred follow-through buying in cotton futures as spot December finished the 
marketing week on its highest close since Jan. 22.

   December jumped 272 points or 3.9% to close at 71.94 cents for the week 
ended Thursday. It traded Thursday inside the prior-day range and closed in the 
upper quarter of the week's 3.13-cent range from 69 cents last Friday to 72.13 
cents on Wednesday, also the highest intraday print since Jan. 22. The price 
action left short-range support at 70.30 cents, with longer-term support at 
68.41 cents and weekly chart support back at 64.65 cents.

   The December-March spread narrowed 0.14 cent to settle at 0.57 cent of 
carry, while May gained 2.44 cent to close at 73.09 cents, July rose 2.33 cent 
to 73.54 cents and December 2021 added 2.06 cents to 71.07 cents.

   Volume increased to an average of 32,189 lots per session from 27,110 lots 
the prior week. Open interest expanded 8,717 lots to 242,789, with December's 
up 2,473 lots to 128,297, March's up 3,932 lots to 67,612 and December 2021's 
up 1,360 lots to the board's third largest at 19,100. Certificated stocks grew 
9,245 bales to 33,477, with 203 bales awaiting review.

   U.S. current-crop all-cotton weekly export sales at the second highest of 
the marketing year offered late-week support along with economic data showing 
an improving economy, even with prospects for a new stimulus deal still deemed 
unlikely before the Nov. 3 presidential election. Ongoing talk of a smaller 
U.S. crop also likely played a role.

   Cash online sales slowed to 24,443 bales from 30,682 bales on The Seam. 
Prices surged 622 points to an average of 66.82 cents per pound, while premiums 
over loan values gained 359 points to average 13.43 cents. Grower-to-business 
sales accounted for 22,809 bales and business-to-business sales for 306 bales. 
Offerings were 20,720 bales late Wednesday.

   On the competitive front, the average of the five lowest-priced world 
growths for the Far East gained 2.28 cent to 74.96 cents, while the 
lowest-priced U.S. cotton landed there gained 2.25 cent to 79.10 cents. The 
U.S. premium thus narrowed three ticks to 4.14 cents.

   The adjusted world price for the marketing week beginning Friday is 55.71 
cents, widening the margin over the base U.S. loan rate and leaving the loan 
deficiency payment at zero for the second straight week.

   Net all-cotton export sales for this season and next rose to a five-week 
high to 278,700 running bales during the week ended Oct. 15, up from 129,900 RB 
the previous week and 155,900 RB a year ago, USDA's weekly report showed.

   Sales of upland and Pima or extra-long staple cotton were 257,400 RB for 
2020-21, up from 116,700 RB the prior week and 147,500 RB last year, and were 
21,300 RB for 2021-22, up 13,200 RB and 8,400 RB, respectively.

   Net upland sales of 227,800 RB, up 51% from the four-week average, reflected 
gross sales of 240,200 RB and cancellations of 12,400 RB. Sales went to 12 
countries, led by Pakistan, China, Mexico, Vietnam and Bangladesh. Pima net 
sales hit a marketing year high of 29,600 RB, up 66% from the prior week and 
53% from the four-week average.

   All-cotton 2020-21 commitments -- outstanding sales of 6.017 million RB plus 
shipments -- increased to 8.839 million RB, narrowing the gap behind year-ago 
cumulative sales to 647,000 RB or about 7%. Commitments were 62% of the USDA 
export estimate, compared with 63% of final 2019-20 upland-ELS exports a year 
ago.

   Commitments for 2021-22 reached 529,900 RB, narrowing the margin below 
year-ago forward bookings to 183,700 RB or 27%.

   All-cotton shipments of 201,500 RB, down from 205,300 RB the prior week but 
up from 159,600 RB last year, brought exports for the season to 2.822 million 
RB. Exports were up 525,000 RB or 23% from a year ago and were 20% of the 
estimate, compared with 15% last year.

   Upland shipments of 194,100 RB, up 1% from the prior week but down 7% from 
the four-week average, went to 17 countries, headed by China, Pakistan, 
Vietnam, Indonesia and Bangladesh. Pima shipments of 7,400 RB dropped 41% from 
the week before and 43% from the four-week average.

   All-cotton shipments of roughly 276,600 RB per week now are needed to reach 
the USDA estimate, while weekly sales averaging approximately 129,800 RB would 
match the export projection.

   On the U.S. crop scene, cotton harvesting advanced 8 percentage points to 
34% completed during the week ended Sunday, down from 38% last year but up from 
the five-year average of 34%, USDA reported.

   Harvesting rose to 42% done in Texas, up 13 points from the five-year 
average, but progress lagged the averages by 13 points at 19% in Georgia, 24 
points at 20% in Alabama, 18 points at 46% in Mississippi, 19 points at 47% in 
Arkansas and 7 points at a leading 73% in Louisiana.

   Boll opening increased 3 points across the belt to 93%, standing at 100% in 
Arizona, Arkansas, Louisiana and Missouri and 98% in Mississippi. Open bolls in 
Texas totaled 92%, eight points above the five-year average.

   Cotton rated fair and better on crops remaining on the stalk nationally fell 
3 points to 67%, down from 77% a year ago, with Texas down a point at 53%, 
Georgia down 3 points at 84% and Mississippi up 2 points at 86%.

   U.S. upland classing quickened to 469,106 running bales from 247 gins during 
the marketing week ended Oct. 15, up from 253,931 RB and 156 gins the prior 
week. This brought the total for the season to 1.609 million RB, down 46% from 
2.972 million RB graded a year ago. Tenderable cotton slipped to 87% from 88.3% 
the week before and 87.6% last year.

   Some small-volume Texas gins in the Coastal Bend and Upper Coast neared the 
end of their ginning seasons. The Corpus Christi classing office continued to 
operate two nine-hour shifts and reached 60% of its 2020-crop estimate.

   With harvesting virtually completed in southern Texas, cotton still on the 
stalk was in the Plains region, where growers continued shredding some dryland 
crops. Nearly half the gins had begun operations. Gins kept pace with 
harvesting and few had modules on the yard. Early quality readings at Lubbock 
showed color grade 11 and leaf grade 1 the predominant; staples averaged 35.04, 
mikes 4.27 and strength 29.74.

   Looking ahead, freezing temperatures are forecast across the entire Texas 
High Plains Sunday, Monday and Tuesday nights, with Lubbock recording 
successive lows of 29, 25 and 28 degrees. This would be prior to the longtime 
average first killing freeze at Lubbock of Oct. 31. A slight chance of rain, 
freezing rain and sleet is forecast for Sunday night and Monday; snow is a 
possibility Tuesday and Wednesday.

   Outstanding 2020-crop CCC upland loans declined 51,637 RB to 258,876 RB 
during the week ended Oct. 12, according to the latest USDA figures. Entries 
were 98,899 RB and repayments were 150,536 RB.

   Upland cotton still under loan from the 2019 crop of 275,778 RB made an 
old-crop, new-crop total of 534,654 RB, of which 91,894 RB were Form A loans 
issued to individual growers and 442,760 RB were Form G loans issued to 
marketing cooperatives or loan servicing agents.

   Merchants purchased a light volume of West Texas 2019-crop cotton forfeited 
to the CCC catalog. The bulk of the outstanding old-crop loans was in Texas, 
where 225,796 RB under loan included 326 RB of Form A and 225,470 RB of Form G.

   Meanwhile, trend-following funds and nonreportable traders bought 11,191 
lots to boost their net-longs to 63,947 in cotton futures-options combined 
during the week ended Oct. 13, a new high since September 2018, according to 
the latest supplemental traders-commitments data reported by the Commodity 
Futures Trading Commission.

   Index funds lightly sold a net 449 lots to shave their net-longs to 75,458. 
The trend followers added 7,933 longs and covered 1,534 shorts to raise theirs 
to 55,978 lots. Commercials sold a net 10,743 lots, adding 11,521 shorts and 
778 longs to lift their net shorts to 139,304.

   Prices during the reporting week ranged from 66.42 cents to 69.47 cents, 
highest at the time since Feb. 21. Open interest expanded 11,741 lots to a 
delta-adjusted 281,835, largest in these weekly reports since Feb. 4.

   After the close Thursday, CFTC on-call data showed unpriced mill sales fell 
1,030 lots to 31,723 in spot December last week, while the unfixed producer 
position dipped 353 lots to 16,417. This resulted in the net call difference 
narrowing 353 lots to 16,417, 13.02% of the OI.

   With some 25 trading sessions left before first notice day, the unpriced 
mill sales -- 25.2% of the OI -- outweighed the unfixed producer position by a 
ratio of 1.93:1.

   On the international scene, China announced that a buying program for the 
state reserves is set for December-March. The procurement target is 500,000 
metric tons or 2.296 million 480-pound bales. In other news, China has ordered 
its mills there to stop buying cotton from Australia, a major exporter, amid 
rising tensions between the two countries.




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