NEW YORK (Dow Jones)--Cotton prices climbed Tuesday as traders anticipate
availability of the fiber will remain low despite expectations for a bumper
fall harvest.
Nearby cotton for October delivery settled 0.23 cent, or 0.3%, higher at
81.45 cents a pound on ICE Futures U.S. The most actively traded December
contract settled 0.21 cent, or 0.3%, higher at 76.70.
Cotton prices have rebounded with textile demand as the economy recovers from
recession lows. Though the U.S., the world's top cotton exporter and No. 3
producer, is expected to yield 50% more of the fiber this year, much of initial
harvest has been bought and sold. Now traders are willing to pay more for
earlier cotton futures than for deferred contracts, which is contrary to
typical market behavior. October futures are "inverted," or trading higher than
December. December is also stronger than March.
"An inverted market is a sign of strong nearby demand," said Mike Stevens, an
independent cotton broker and analyst based in Mandeville, La. Crop progress
reports indicate harvest may begin early in the U.S, though there's speculation
that marketing channels will still be empty in November, Stevens said.
"The fact that many merchants will no longer sell cotton for delivery until
after the first of the year also adds credibility to that story," he said.
However, most-active cotton futures prices may have out-paced their recent
gains and are could soon drift back toward support at 73 cents, said Boyd
Cruel, senior softs analyst at Vision Financial Markets in Chicago. The
December contract has resistance at 77.70 to 77.25, Cruel said.
Volume was estimated 19,328 lots. In options, approximately 2,871 calls and
3,064 puts traded on the floor, according to exchange data.
ICE daily cotton stocks decreased by 88 500-pound bales Monday to total
53,315 bales, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 3,497 positions Monday to total 165,168, according to
the exchange.
Close Change Range
Oct 81.45 +0.23 80.30-81.48
Dec 76.70 +0.21 76.00-76.94
Mar 74.33 -1.89 74.29-75.38