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DTN Closing Cotton            11/21 14:52

   Cotton Finishes Lower for First Time in Five Days 

   Suspected profit-taking pulled the market off new three-month highs. Sizable 
batch of unpriced mill on-call sales reported in unshipped export commitments. 
Red flag warning issued on Texas High Plains.   

By Duane Howell
DTN Cotton Correspondent

   Cotton futures settled lower Tuesday, reversing off new three-month highs 
amid suspected profit-taking following a four-day rally. 

   Most-active March closed down 71 points to 70.14 cents, in the lower half of 
its 181-point range from up 49 points at 71.34 to down 132 points at 69.53 
cents. It climbed to a new intraday high since Sept. 12, fell to within 12 
ticks of the prior-day low and pared the setback. 

   December, facing first notice day on Friday, lost 47 points to settle at 
70.90 cents, trading within a 212-point range from 72.52 to 70.40 cents. The 
other months settled down 39 to 65 points in traded contracts. 

   Volume was estimated at 53,607 lots, near the 53,768 lots the prior session 
when spreads accounted for 25,307 lots or 47% and EFP 692 lots. Options volume 
rose to 10,046 lots (6,969 calls and 3,077 puts) from 7,243 lots (5,452 calls 
and 1,791 puts). 

   Bullish technical price action, heavy unpriced mill on-call sales -- 
including a large volume in December -- and strong demand illustrated by last 
week's report of the largest U.S. weekly export sales since January 2015 
spurred the rally. 

   The rally stirred concerns about the possibility of sales cancellations if 
prices continued to move higher, with a sizable batch of the unfixed call sales 
resting in unshipped export commitments. 

   Quality issues in some U.S. and foreign supplies and talk of 
lower-than-expected yields in parts of the U.S. belt have drawn attention. Leaf 
grades have averaged a higher-than-usual 4 in Delta cotton classed at Dumas and 
Memphis and micronaire has averaged in the discount area of 3.3 at Lubbock. 

   Slow shipments to overseas customers -- about 17% below a year ago -- have 
been blamed partly on quality issues, but the pace of sales -- up 39% from last 
year -- nevertheless has produced expectations in some quarters that USDA 
likely is going to be compelled to raise its export estimate. 

   On the weather scene, a red flag warning has been issued for Tuesday 
afternoon for much of the Texas High Plains and areas of the adjoining Rolling 
Plains. 

   Gusty north winds of 25 to 30 miles per hour and dry air with humidity of 
10% to 20% were expected to produce critical fire weather conditions. Outdoor 
burning and activities involving sparks or open flames were highly discouraged. 

   Dry weather and temperatures mostly above normal forecast for the remainder 
of the next week to 10 days are expected to favor increased cotton harvesting. 

   Elsewhere, ginning continued uninterrupted on large backlogs of modules on 
gin yards in the North Delta last week and progressed slowly in the South Delta 
because of a lack of workers, reports indicated. 

   Sporadic showers delayed harvesting in some late-planted fields and 
producers were concerned about the effects on cotton still in the fields. 
Regrowth was observed on defoliated cotton in a few unharvested fields in 
Arkansas and Mississippi. Yields were reported ranging from 900 to 1,400 pounds 
in the North Delta and 900 to 1,300 pounds in the South Delta. 

   Futures open interest expanded 3,934 lots to 227,888 on Monday's rally, with 
December's down 4,598 lots to 7,894 and March's up 6,602 lots to 154,679. 
Certified stocks were unchanged at 47,951 bales. 

   Duane Howell can be reached at Talk@dtn.com 


(BAS)

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