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Weekly Cotton Comments                 05/22 04:53

   Cotton Up Slightly After Hitting New Highs

   Export sales slowed; shipments lagged needed pace. U.S. crop 44% planted; 
lagged in Delta. Upland 2019 crop under loan dipped to 2.634 million RB.  
Cotton aid details reported. Hedge funds bought 4,635 lots to cut their net 
shorts to 8,388. Mills priced 1,023 July on-call lots.

Duane Howell
DTN Contributing Cotton Analyst

   Cotton futures finished marginally ahead for the marketing week, with spot 
July stair-stepping to four new rally highs in a row (since March 18-17) before 
reversing to close with two consecutive losses as weekly export sales slowed 
and shipments lagged the pace needed to make the estimate.

   July gained 21 points or 0.4% for the week ended Thursday to close at 58.06 
cents, below Wednesday's low and in the lower third of its 253-point range from 
59.85 to 57.32 cents. It achieved a 50% rebound (59.59) of the break from the 
February high of 71.02 to the April 1 contract low at 48.15 cents. A 50% 
recovery of the plunge from the January high of 74 cents would be 61.08. The 
price action left short-term support at 57.40.

   The July-December spread weakened 73 points to settle at 64 points carry, 
with December gaining 94 points to close at 58.70 cents.

   Volume slipped to an average of 24,647 lots per session from 27,644 lots the 
prior week. Open interest expanded 2,865 lots to 179,784, with July's down 
4,958 lots to 82,864; December's up 6,847 lots to 65,322; and March's down 159 
lots to 65,322. Cert stocks grew 2,251 bales to 5,830.

   Cash online sales slid to 6,185 bales from 20,011 bales on The Seam. Prices 
dropped 150 points to an average of 51.66 cents per pound, with premiums over 
loan repayment rates falling 109 points to average 4.72 cents. 
Grower-to-business sales fell to 3,886 bales and business-to-business sales to 
2,299 bales. Offerings ranged mostly from around 131,000 bales to 201,000 bales.

   On the competitive front, the average of the five lowest-priced world 
growths for the Far East gained 65 points to 65.26 cents, while the 
lowest-priced U.S. growth landed there rose by 125 points to 66.50 cents.  The 
U.S. premium thus widened 60 points to 66.50 cents. With the adjusted world 
price up to 48.01 cents for the program week beginning today, the loan 
deficiency payment or marketing loan gain is down to 3.99 cents.

   Net all-cotton export sales for this season and next fell to 249,700 running 
bales during the week ended May 14 from 329,600 the prior week and 625,000 in 
two-crop sales a year ago. China again accounted for the bulk of sales for both 
crop years amid slack business with other countries.

   Sales of 129,500 RB for this season, down from 237,700 the prior week and 
379,000 RB a year ago, boosted 2019-20 commitments to 16.838 million RB, 
narrowing the lead over last year to 1.508 million RB or to about 10%.

   Commitments -- outstanding sales of 5.618 million RB, up from 5.272 million 
a year ago -- stood at 116% of the USDA export estimate, compared with 107% of 
final shipments at the corresponding point last season. With some 10 weeks left 
in the marketing year, a large volume of unshipped commitments is likely to be 
carried into next season.

   Upland net sales of 128,900 RB, down 46% from the prior week and 51% from 
the four-week average, went to 10 countries, with China accounting for a net 
153,600 RB. Gross sales were 186,400 RB and cancellations were 57,500 RB. 
Upland commitments were 117% of the export projection, against the five-year 
average of 102%.

   Net sales for next season of 120,200 RB, up from 91,100 RB the prior week 
but down from 246,000 in forward sales last year, included 79,200 for China. 
New-crop commitments were 2.684 million RB, compared with 3.552 million a year 
ago, and were 17% of the 2020-21 export forecast. A year ago, forward bookings 
were 24% of the current 2019-20 export projection.

   All-cotton shipments of 256,800 RB, up from 249,600 the previous week but 
down from 361,600 a year ago, raised exports for the season to 11.22 million 
RB, up 1.163 million RB or about 10% from a year ago and 77% of the 2019-20 
estimate. Last year, shipments were 70% of final exports. To achieve the 
forecast, exports need to average roughly 317,100 RB per week.

   On the U.S. crop scene, cotton planting advanced 12 percentage points to 44% 
completed during the week ended Sunday, up five points from a year ago and four 
points from the five-week average, USDA reported.

   Progress moved up nine points in Texas to 46% done, up 13 points from last 
year and 16 points above the five-year average. Eight percent was squaring, up 
from 1% the week before and 5% last year and the average.

   Planting progressed in the Texas Plains; hail and heavy rains damaged cotton 
in some areas. Good planting rains fell, but dry areas remained. Some growers 
finished planting, while others in the nearby Edwards Plateau awaited more 
moisture. Several thunderstorms brought beneficial moisture; winds sand-blasted 
some young stands that were expected to be replanted.  The cotton planting 
insurance deadline in the northern HP is May 31.

   Cotton was blooming in the Rio Grande Valley and fields were irrigated. 
Stands in the Upper Coast established a foundation for a good boll load. Cotton 
reached squaring in the Coastal Bend. Some acreage there failed.  Dry 
conditions prevailed, though some rain fell at scattered locations. Many 
growers completed planting in the Blacklands. Some fields were replanted.

   Elsewhere, cotton planting continued to lag in the Mid-South where only 15% 
had been seeded in Missouri, 52 points behind the five-year average. Progress 
stood at 52% planted in Mississippi and 47% in Arkansas, six points and 24 
points, respectively, behind the state averages. Cotton struggled to germinate 
in many fields because of frequent showers and low soil temperatures.

   In the Southeast, progress in the top two cotton-producing states reached 
41% planted in Georgia and 63% in Alabama, compared with the state averages of 
48% and 60%, respectively. Mostly dry, sunny to partly cloudy conditions 
dominated the weather pattern in the Lower Southeast.

   Progress was most advanced in the Far West at 85% planted in Arizona and 75% 
in California, three points ahead and five points behind average, respectively. 
Stands made good progress under hot, dry conditions.

   Back on the High Plains, forecasts for above-average rainfall raised hopes 
for beneficial moisture in dry areas around Lubbock, with chances for showers 
and thunderstorms extending daily from 20% on Saturday and higher through at 
least Thursday. Areas of the Rolling Plains were under a severe thunderstorm 
watch Thursday night. Large hail, wind gusts to 70 mph and heavy rain were 
rated possible in the stronger cells.

   In other crop news, U.S. upland cotton under loan from 2019 declined 10,855 
RB to 2.634 million during the week ended May 11, according to the latest USDA 
figures. Repayments were made on 14,812 RB and entries were 3,957 RB.

   An unknown portion -- believed the bulk -- of the outstanding loans is 
committed and awaiting shipping dates to be redeemed. Upland loans outstanding 
included 713,835 RB of Form A issued to individual growers and 1.92 million RB 
of Form G loans issued to marketing cooperatives or loan servicing agents.

   On the policy front, eligible upland producers will get a payment of 9.5 
cents per pound on 50% of a grower's 2019 production or the 2019 unpriced 
inventory as of Jan. 15, 2020, whichever is smaller, details indicated this 
week. Eighty percent of the expected total will be issued initially and 20% 
dispersed later, subject to funding availability.

   Unpriced inventory is defined as production not subject to an agreed-upon 
price in the future through a forward contract, agreement or similar binding 
document. Producers who sold or contracted their 2019 upland crop prior to Jan. 
15, 2020 aren't eligible for this payment.

   Applications for aid can be made from May 26-Aug. 28 at local Farm Services 
Agency offices. There's a payment limit of $250,000 per person or per entity 
for all commodities combined.

   President Donald Trump and Agriculture Secretary Sonny Perdue announced a 
$16 billion coronavirus aid program for agriculture at a White House event. 
Funding includes $9.5 billion from the Coronavirus Aid, Relief, and Economic 
Stability (CARES) Act and $6.5 billion in existing Commodity Credit Corp. funds 
for the Coronavirus Food Assistance Program.

   Meanwhile, trend-following funds bought 4,635 lots in cotton futures-options 
combined during the week ended May 12, reducing their net shorts to 8,388 lots 
by covering 2,812 shorts and adding 1,823 longs, according to the latest 
traders-commitments data.

   The Commodity Futures Trading Commission data showed index funds sold a net 
208 lots to nudge their net longs down to 56,871 lots, while non-reportable 
traders bought 1,085 lots to raise theirs to 2,191. Combined, hedge funds and 
specs bought 5,270 lots to drop their net shorts to 6,197.

   Commercials sold a net 5,511 lots, adding 5,918 shorts and 407 longs to push 
their net shorts up to 50,673. Prices during the reporting week ranged from 
53.20 cents, lowest since April 22, to 58.59 cents, highest at the time since 
March 18, basis July. Combined open interest increased 1,684 lots to a 
delta-adjusted 230,508.

   On-call data reported by the CFTC after the close Thursday showed mills 
priced 1,023 lots in spot July last week to reduce their unpriced sales to 
25,703, while producers priced 539 lots to cut their unfixed position to 
15,816. This trimmed the net call difference 484 lots to 9,887, 11.4% of the 
July OI. Mills' unpriced sales were 29.7% of the OI.

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