Chance of direct impacts from Hurricane Irma reported increasing for the Florida Keys and portions of the Florida Peninsula. China banned trading firms from buying cotton from the state reserves.
Cotton futures finished up as much as the 300-point daily limit Tuesday amid fears of potential damage to the U.S. crop from Hurricane Irma even as losses continued to be counted from Hurricane Harvey.
December, the only contract to close at the limit, settled at 74.88 cents, its highest close since May 15 and within striking distance of its contract high of 75.72 on March 20. It opened on the session low overnight, up 12 points to 72 cents and just above FridayΆs high.
March closed up 218 points to 73.18 cents, in the upper quarter of its 279-point range from 71 to 73.79 cents. October touched limit up at 75.55 and settled up 271 points at 75.26 cents.
The chance of direct impacts from Irma, now a Category 5 storm, later this week and this weekend is increasing for the Florida Keys and portions of the Florida Peninsula, the National Hurricane Center said, though it was still too early be sure of its future track. A new tropical storm named Jose formed Tuesday in the Atlantic, to east of Irma.
Volume jumped to a heavy 57,269 lots from 30,822 lots the previous session when spreads accounted for 10,366 lots or 34% and EFS 102 lots. Options volume rose to 27,759 lots (10,512 calls and 10,247 puts).
A ban by China to disallow trading firms to buy cotton out of the state reserves may have contributed to the sixth consecutive daily ICE cotton futures gain and the 12th in the last 13 sessions.
The ban, which propelled strong gains on ChinaΆs Zhengzhou cotton futures, was implemented Monday and will continue through Sept. 29 when the daily stockpile auctions are scheduled to end.
The new rules will help meet demand from cotton spinning firms, Reuters reported, citing a notice posted by the China National Cotton Reserves Corp. on industry website Cncotton.com.
Any non-cotton textile firms who participate in biding in the daily auctions would be stopped from taking part in future sales, according to the notice. Firms also are banned from reselling cotton bought in the auctions, it said.
Beijing resumed selling stockpiled cotton on March 3 and had planned to stop the auctions for the season at the end of August, prior to the harvesting of the new crop, but extended the sales an additional month after prices rose amid tighter supply.
In a world markets and trade report last month, USDAΆs Foreign Agricultural Service said sales from the reserves had remained strong and had totaled more than 10 million bales (2.2 million metric tons). Sales had been evenly split between spinners and traders.
The average sales price had been 96.60 cents per pound, about 10 cents higher than the Cotlook A Index of world values of 86 cents during the same period. About 138,000 bales (30,000 tons) had been offered for sale each business day with a base price calculated from the average of internal and world prices over previous weeks.
Daily sales rates had varied widely, with much of the fluctuation associated with buyersΆ expectations of changes in the base price. Sales had been split roughly equally between cotton from the 2012 and 2013 crops, with sales from the 2011 crop accounting for only 3% of the total.
If sales this month maintain the rate seen so far, the total would be about 13.3 million bales (2.9 million tons). This would be up from roughly 2.7 million tons (12.4 million bales) sold in the 2016 tranche.
Futures open interest grew 3,750 lots to 229,877 on Friday, with DecemberΆs up 1,743 lots to 144,907 and MarchΆs up 1,446 lots to 60,314. Certified stocks declined 516 bales to 8,777.
Warehouse operators licensed to store cert stocks at Houston and Galveston have reported there has been no damage to the cotton. However, the facilities remained closed and the stocks inaccessible in the aftermath of Harvey. The cert stocks include 165 bales at Houston and 1,213 bales at Galveston.
