NEW YORK (Dow Jones)--July cotton prices were lower Monday as the rising
dollar prompted sales.
Nearby cotton for July delivery settled down 0.72 cent, or 0.9%, at 82.25
cents a pound on ICE Futures U.S.
Nearby cotton prices have traded in a roughly 80 cents-85 cents band since
March. Cotton is still more than 40% higher from the same time last year as
rebounding economic growth boosted demand for the fiber. Textiles are some of
the first items bought when household budgets relax.
July cotton came under pressure from the stronger dollar Monday as Spain's
weekend bailout of a savings bank pressured the euro. Traders avoided risk on
concerns that euro-zone debt is still a threat. A strong dollar makes
commodities more expensive in other currencies. At the same time, sugar,
equities and coffee prices were also weaker.
Fund traders sold July in favor of December, however, because of weather risk
facing the crop as planting ramps up. December cotton prices are trading at a
premium to July, as recent high prices have sparked more plantings worldwide.
More supply is expected to keep the market under pressure once the harvested
cotton begins to hit the market in the fall.
"Spec[ulative] funds have kind of given up on July and moved to December,"
said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta.
Cotton traders are also watching exchange stock levels and weekly U.S.
export sales to see if the current crop of cotton will meet the strong demand
the market anticipates.
"There's a lot of people wondering whether we've got all this demand business
or not," said Jack Scoville, vice president at Price Futures Group in Chicago.
ICE daily cotton stocks increased by 4,849 500-pound bales Friday to total
1.068 million with 20,863 bales awaiting review and 1,287 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 1,217 positions Friday to total 189,965, according to
the exchange.
Volume was estimated 12,933 lots. In options, approximately 1,942 calls and
2,279 puts traded on the floor, according to exchange data.
Close Change Range
Jly 82.25 -0.72 82.12-83.23
Oct 77.35 -0.19 77.15-78.26
Dec 79.95 +0.50 77.04-78.00
