May 15, 2018
By Duane Howell DTN Cotton Correspondent
Sharp U.S. dollar index gains and steep U.S. stock market losses may have contributed to restraining the cotton bounce. Cotton Council urged approval of the House farm bill without damaging amendments. House debate and vote could come later this week.

Cotton futures settled slightly higher Tuesday, with July eking out a tiny gain after bouncing off an 11-session low.

July finished up six points at 83.76 cents, in the lower third of its 103-point range from down 34 points at 83.36 to up 69 points at 84.39 cents. December edged up 25 points to close at 80.11 cents, in the upper half of its tight 72-point range from 79.63 to 80.35 cents.

Sharp gains in U.S. dollar index futures and steep U.S. stock market losses as bond yields surged to their highest level in almost seven years after strong retail sales data stoked inflation concerns may have contributed to restraining the cotton bounce.

Volume rose to an estimated 26,800 lots from 24,779 lots the prior session when spreads accounted for 8,947 lots or 36% and EFP 86 lots. Options volume increased to 8,350 lots (4,124 calls and 4,226 puts) from 7,894 lots (4,681 calls and 3,213 puts). On the Washington scene, the National Cotton Council issued a statement urging the House to approve the farm bill without any damaging farm policy amendments.

With prospects that the House could debate and vote on the bill later this week, the House Rules Committee was scheduled to begin meeting Tuesday afternoon to winnow down the 106 amendments that have been filed for the legislation, DTN Ag Policy Editor Chris Clayton reported.

NCC Chairman Ron Craft said the legislation, approved recently by the House Agriculture Committee, includes critically important policies for cotton producers and the entire cotton industry. He commended the Agriculture Committee for its work, although budget constraints did not allow all of cotton’s priorities to be included.

“Cotton producers rely on the certainty and predictability of farm law to obtain the financing necessary for capital investments and annual crop production,” Craft said. “Without strong commodity and crop insurance policies underpinning U.S. agriculture, lenders would be reluctant to provide financing to an industry operating at the mercy of weather extremes and volatile global market prices.”

The Texas High Plains ginner emphasized that current trade tensions “further underscore the importance of having a strong, predictable farm policy. Cotton is heavily export dependent, and this farm bill continues important policies to help U.S. cotton producers compete in a highly competitive global market place.”

The nation’s 20,000 cotton farms and other cotton businesses employ 126,000 people and generate more than $21 billion in annual revenue, the ginner and producer from Plains noted. A strong farm bill, he added, also supports a healthy and thriving rural economy that includes gins, warehouses, marketing cooperatives and merchants to market the crop, cottonseed processors and merchandisers and textile manufacturers.

The NCC also joined more than 300 agricultural, crop insurance and lending groups from across the nation on a letter to House members urging strong opposition to amendments that could hurt farm families when the farm bill is being considered on the floor. Specifically, the letter focused on amendments seen as undermining crop insurance, changing the sugar program and imposing unworkable payment limits.

Back on the futures market, certified stocks grew 3,667 bales to 78,173 on Monday. There were 7,159 newly certified bales and 3,492 bales decertified. Open interest declined 521 lots to 283,001, with July’s down 1,245 lots to 133,426 and December’s up 31 lots to 117,083. (Source: