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Weekly Cotton Comments                 09/30 05:02

   Cotton Loses 12% Amid Plunge in Equities

   Export business remained weak. Hurricane trek eyed. U.S. cotton 67% open and 
15% harvested. Classing recap reached 804,788 bales. Hedge funds stepped up 
their selling as OI swelled to the largest since April. Unpriced mill on-call 
sales based in December fell 4,177 lots. Cotton area estimated up 8% in Mali, 
Burkina Faso and Senegal.

Duane Howell
DTN Contributing Cotton Analyst

   Cotton futures plunged 1,138 points or 11.79% to close at 85.16 cents in 
benchmark December for the marketing week ended Thursday as fears about 
inflation, interest rate hikes, rising bond yields and recession slammed the 
industrial commodity anew amid another round of weak export sales.

   December settled just off the low of its 1,150-point range from 96.50 cents 
last Friday to 85 cents on Thursday. It posted its lowest intraday price since 
July 15 (82.50 cents), which was the lowest of the calendar year. December has 
closed on the plus side only two times -- for a total of 399 points -- in the 
last 10 sessions. It has shed 28.05 cents or 24.8% for the month.

   The inverted December-March spread narrowed 44 points to close at 243, while 
the intercrop July-December inversion narrowed 241 points to settle at 584. 
December 2023 lost 697 points for the week to finish at 73.56 cents, which 
certainly wouldn't get much cotton planted against acreage-competing crops. It 
traded Thursday on an inside-range, 238-point span, holding above Wednesday's 
low of 72.65 cents.

   Volume increased to an estimated daily average of 35,240 lots from 33,477. 
Open interest expanded 6,317 lots to 220,793, with December down 1,209 lots to 
107,518, March up 4,190 lots to 53,946, May up 1,756 lots to 21,210, July up 
631 lots to 13,273 and December 2023 up 797 lots to 21,711. Cert stocks 
increased to 1,123 bales from 769.

   Three delivery notices have been issued against thinly traded October, which 
had only 14 lots open coming into Thursday. The notices were issued by Term 
Commodities and stopped by SG Americas Securities.

   Hurricane Ian, which made landfall as a Category 4 storm Wednesday night on 
the west coast of Florida, was expected Thursday to regain hurricane strength 
after moving out into the Atlantic and make landfall a second time along the 
South Carolina coast as a Category 1 storm.

   Traders awaited news of the storm's ultimate path and crop damage 
assessments. A slight deviation in the projected path could make a significant 
difference in the amount of cotton affected. As of Sunday, cotton was 54% open 
in South Carolina and 60% open in Georgia, where boll rot already has raised 
some concerns.

   In outside markets, U.S. stocks fell fast and furious Thursday as 
bond-market turmoil upended broader markets and investors wrestled anew with 
worries about a global slowdown, The Wall Street Journal reported. The Dow 
Jones Industrial average was on pace for its worst monthly drop since March 
2020, the height of the pandemic panic.

   Cash online sales fell to 835 bales from 1,935 bales on The Seam. There were 
three days when no cotton at all changed hands. Prices fell 1,041 points to an 
average of 91.80 cents, reflecting a 963-point drop in premiums over loan rates 
to an average of 38.64 cents. Grower-to-business sales were 195 bales and 
business-to-business sales were 640 bales.

   On the competitive scene, the average of the five lowest-priced world 
growths for the Far East fell 646 points to 107.34 cents, while the 
lowest-priced U.S. growth dropped 666 points to 107.15 cents. U.S. cotton thus 
fell to a 19-point discount from a one-point premium. The adjusted world price 
declined to 82.42 cents.

   The Cotlook a Index of world values coming into Thursday had fallen 525 
points from a week earlier to 106.70 cents, narrowing the international basis 
by a single point to 18.61 cents over the prior-day December futures settlement.

   Net all-cotton export sales for this season and next edged up to 73,200 
running bales during the week ended Sept. 22 from only 41,800 RB the prior week 
and were down from 588,300 RB a year ago, USDA reported. Current-crop sales 
were 31,400 RB, down from 32,700 RB the week before and 588,300 RB last year, 
while new-crop sales of 41,800 RB were up from 13,300 RB and zero, 
respectively. There were 21,700 RB in current-crop cancellations.

   All-cotton 2022-23 commitments -- outstanding sales plus shipments -- stood 
at 8.123 million RB, up about 685,000 RB or a diminished 9% from a year ago. 
New-crop commitments of 995,500 RB widened the lead over year-ago forward 
bookings to 308,700 RB.

   Shipments of upland and Pima or extra-long staple cotton combined fell to 
188,900 RB from 232,700 RB the week before but were up from 175,600 RB last 
year. All-cotton exports of 1.840 million RB were up about 270,000 RB from a 
year ago. To achieve the estimate, shipments need to average roughly 235,900 RB 

   On the crop scene, U.S. boll opening advanced eight points to 67% during the 
week ended Sunday, up nine percentage points from last year and five points 
above the five-year average, while harvesting moved up four points to 15%, up 
four points and a point, respectively, USDA reported.

   Boll opening was ahead of average in 10 states, including Alabama, 74; 
California, 60%; Kansas, 61%; Mississippi, 85%; Missouri, 66%; North Carolina, 
80%; Oklahoma, 61%; South Carolina, 66%; Texas, 62%; and Virginia, 75%.

   Harvesting in a dozen states was led by Texas with 25% off the stalk, up 
four points from average; Louisiana at 23%, down a point; Mississippi at 16%, 
up five points; and Arizona at 15%, even.

   Crop conditions belt-wide showed good-to-excellent down two points for the 
week to 31%, fair down a point to 27% and poor-very poor up three points to 
41%, compared with 65%, 29% and 6%, respectively, a year ago.

   U.S. cotton classing expanded to 121,485 bales for the week ended Sept. 22 
to bring the season's total to 804,788, up from 532,744 bales a year ago, 
according to USDA recaps. Tenderable cotton amounted to 67.5% for the week and 
84.7% for the season, down from 87.2% and 88.1%, respectively, last year.

   Classing of 105,719 bales in Texas hiked the 2022-crop state total to 
786,326, of which 781,851 bales were at Corpus Christi. The Corpus facility has 
classed an estimated 70% of the crop in eastern and southern Texas. Elsewhere, 
classing by states for the season included 8,476 bales from Louisiana, 2,423 
from Mississippi, 2,090 from Arkansas and 569 from Georgia.

   Insurance adjusters continued to evaluate fields in the Texas High and 
Rolling Plains as producers pondered harvest-or-abandon decisions. A few gins 
won't operate this season. Others have indicated they will operate one shift 
and won't begin ginning until they have accumulated enough modules on the gin 
yard to run non-stop.

   Certified acreage figures in Dawson County, a major dryland producer south 
of Lubbock, has shown that 307,809 acres or 81% of the 379,787 acres planted in 
cotton have been abandoned. And estimates have indicated the final abandonment 
may reach 88% to 90%. Dawson County produced 355,400 bales last season.

   Back to classification, an additional 102,836 bales classed through Sept. 27 
lifted the season total to 927,624. Tenderable slippages this early in the 
season and other weather factors have prompted talk that high quality cotton 
could command unusually strong premiums.

   On the money-flow front, trend-following hedge funds stepped up their 
selling to a net 5,650 lots to cut their net longs to 10,922 lots on the 
liquidation of 5,904 longs and the covering of 255 shorts in cotton 
futures-options combined during the latest reporting week ended Sept. 20.

   The Commodity Futures Trading Commission's traders-commitments data showed 
non-reportable traders -- mostly small speculators -- sold a net 1,298 lots to 
drop their net longs to 5,673 lots, while index traders sold a net 1,240 lots 
to lower theirs to 67,938.

   Commercials bought a net 8,188 lots, adding 9,167 longs and 979 shorts to 
drop their net shorts to 84,533 lots. Their net shorts fell 4.0 percentage 
points to 27.9% of the OI.

   Prices during the reporting week spanned a wide 1,105-point range from 
104.17 cents to 93.12 cents, basis December. Combined open interest swelled 
11,828 lots to a delta-adjusted 302,640 lots, largest since the week ended 
April 12.

   Meanwhile, unpriced mill on-call sales based in December fell 4,177 lots to 
48,634 last week, while unfixed producer call purchases dipped 585 lots to 
18,100, the CFTC reported after the close Thursday. The net call difference 
fell 3,592 lots to 30,534, 28.2% of the futures OI. The unpriced mill sales 
outweighed the unfixed producer purchases by a ratio of 2.7:1, not counting any 
options offsets.

   On the international scene, the cotton area for harvest in Mali, Burkina 
Faso and Senegal is estimated to rise 8% from the prior year to 1.44 million 
hectares (one hectare equals 2.471 acres), according to USDA's Foreign 
Agricultural Service.

   The attach, based at Dakar, Senegal, attributed the increase largely to 
significant subsidies on fertilizers from the relevant governments and the 
private sector along with government subsidies on farm gate prices to 
incentivize plantings. Production is projected to increase 6% to 2.6 million 
bales based on expectations of typical weather, less pest pressure and 
appropriate use of fertilizer.

   The 2021-22 area and production are estimated to have increased 80% and 91% 
to 1.33 million hectares and 2.46 million bales, respectively, from the 
previous marketing year.

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