NEW YORK (Dow Jones)--Cotton leapt higher Wednesday with a boost from buying
on the weaker dollar and buying at the end of the month.
Nearby May on ICE Futures U.S. settled up 1.01 cents, or 1.2%, at 80.55 cents
a pound.
The dollar weakened as a bearish private estimate showed U.S. job losses were
higher-than-expected in March. The softer greenback makes futures less
expensive in other currencies. Most agricultural commodities, including Chicago
Board of Trade grains, took losses, though crude and most metals posted gains.
Buying at the end of the month and the end of the quarter supported cotton
Wednesday, said Sharon Johnson, senior cotton analyst at First Capitol Group in
Atlanta.
Analysts said talk of strong overnight sales also boosted cotton as traders
look for demand for the May and July contracts, which represent the 2009-10
season's crop. Cotton prices are trading near two-year highs hit March 5,
driven in part by forecasts that for cotton consumption by textile mills will
outpace production by 13%, U.S. Department of Agriculture data show.
Traders are rolling from the May contract into July and looking at the
difference between the contracts to determine demand for the contract, said
Mike Stevens, an independent cotton broker and analyst based in Mandeville, La.
"Spreaders are going to continue to be extremely active," Stevens said.
He said May futures are range-bound from 79-83 cents.
The U.S. Department of Agriculture released its 2010 prospective cotton acres
report at 10.50 million acres, up 15% from the previous year. Analysts said the
estimate was in line with industry expectations, and had little effect on
futures trading. Stronger cotton prices relative to alternative crops like corn
and soy are likely to encourage more plantings.
ICE daily cotton stocks increased by 4,538 500-pound bales Tuesday to total
791,002 bales with 18,523 bales awaiting review and 401 decertification orders,
according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 715 positions Tuesday to total 187,461, according to
the exchange.
Volume was estimated 31,630 lots. In floor-traded options, approximately
5,418 calls and 4,389 puts traded, according to exchange data.
Close Change Range
May 80.55 +101 pts 79.50-81.72
July 81.82 +100 pts 80.74-82.70
Dec 75.01 + 44 pts 74.06-75.11