NEW YORK (Dow Jones)--Follow-through buying lifted ICE Futures U.S. cotton
Wednesday as prices continued to push off of recent lows.
March cotton settled up 56 points, or 0.8%, at 69.82 cents a pound.
Cotton futures bounced from 16-week lows Tuesday as traders covered their
short exposure, or bets that prices were headed lower. That action continued
Wednesday, but stalled out midsession, analysts said.
At the same time, the U.S. dollar rose and knocked commodities prices back,
which put a lid on cotton gains for the session, they said. The greenback rose
on concerns over euro-zone budget issues and better-than-expected U.S. jobs
data. Traders tend to sell dollar-denominated futures when the strong greenback
makes contracts more expensive in other currencies.
Analysts said traders will look for further assurance that gains are not
temporary and the near-term trend has changed.
"We'll need a few good sessions to give people confidence that the bottom is
in," said Peter Egli, director of risk management at Plexus Cotton Ltd. in
Phoenix.
Cotton backed off of an extended rally in late 2009 built on tighter world
supplies and growing demand. The International Cotton Advisory Committee said
it expects world cotton mill use to come in 7.25% higher in the ongoing 2009-10
marketing year as the global economic recovery jump-starts textile consumption.
Traders are looking ahead to weekly U.S. export sales due Thursday at 8:30
a.m. EST. Analysts expect another week of solid sales. The market is also
awaiting the Friday afternoon release of the National Cotton Council's
prospective plantings survey estimate. Analysts expect U.S. cotton plantings to
rise in 2010 as strong prices attract more seedings.
Traders expect this information to change the tone of the cotton market, Egli
noted.
ICE daily cotton stocks increased by 10,348 500-pound bales Tuesday to total
491,167 bales with 60,386 bales awaiting review, according to exchange data.
ICE cotton open interest increased by 786 lots Tuesday to total 171,616 lots,
according to exchange data.
Volume was estimated 22,597 lots. In options, approximately 2,509 calls and
2,390 puts traded, according to exchange data.
Close Change Range
Mar 69.82 +56 pts 69.26-70.67
May 71.35 +63 pts 70.76-72.22
Dec 71.43 +47 pts 70.68-72.00