Widespread beneficial rains will help replenish depleted topsoil moisture in the Texas Plains. Weekly sales will swell already heavy export commitments. Index fund rolls set to begin Thursday.
Cotton futures closed below a key support area Wednesday amid technically oriented selling and expectations for expanded U.S. prospective plantings.
Spot May settled down 74 points to 76.14 cents, its lowest close since Feb. 27 and near low of its 98-point range from up 20 points at 77.08 cents to down 78 points at 76.10 cents. The close below the former support area around 76.80 now is viewed as near-term resistance.
July closed down 65 points to 77.63 cents, trading within a 94-point range from 78.48 to 77.54 cents. December traded within a 100-point range from 75 to 74 cents and finished down 79 points to 74.10 cents, its lowest close since Feb. 24.
Expectations for the prospective plantings report on Friday appear to range mostly above USDAΆs preliminary Outlook Forum estimate of 11.5 million acres, compared with 10.07 million acres seeded last year.
Volume quickened to an estimated 30,286 lots from 27,923 lots the prior session when spreads accounted for 13,350 lots or 48%, EFP 224 lots and EFS 140 lots. Options volume declined to 4,883 lots (2,229 calls and 2,654 puts) from 6,139 lots (2,900 calls and 3,239 puts).
Widespread beneficial rains in the West Texas Plains overnight will help to replenish topsoil moisture depleted by gusty winds in a broad cotton region.
Nearly all the National Weather ServiceΆs reporting sites in the major High Plains cotton area got at least some rain, with the heaviest amounts falling north and east of Lubbock. Amounts at 35 NWS cooperative sites averaged around 1.25 inches.
Some areas southwest of Lubbock got little or no rain, with 0.03 reported at Brownfield in Terry County. Mostly dryland areas at Lamesa and Tahoka reported 0.03 and 0.21 inch, respectively. Lubbock got 0.35 inch, while Reese Center just west of town registered 1.43 inches on the West Texas Mesonet.
Meanwhile, some analysts look for the U.S. export sales report on Thursday to range roughly from 250,000 to 300,000 running bales of upland for shipment this season.
That would compare with 328,200 RB sold the prior week ended March 16. May futures during the week ended May 23 traded from 78.74 to 76.67 cents and closed at 77.27 cents, down 90 points for the period.
Upland sales the last four weeks have averaged 343,800 RB and shipments have averaged 391,500 RB. Sales have reached 97% of the USDA export forecast, compared with 84% of final 2015-16 shipments at the corresponding point last season.
Some traders also have anticipated the beginning Thursday of index fund rolling of longs from May. This opens with the three-day roll of the Jim Rogers fund on Thursday and will involve selling May and buying July. The Goldman roll is expected to begin April 7 and continue for five days.
Futures open interest dipped 274 lots Tuesday to 281,653, with MayΆs down 2,786 lots to 146,133, JulyΆs up 1,044 lots to 55,212 and DecemberΆs up 1,138 lots to 70,826.
Stocks in deliverable position increased 1,030 bales to 327,251. There were 1,077 newly certified bales at Dallas-Fort Worth and 47 bales decertified at Greenville.
