NEW YORK (Dow Jones)--Cotton prices climbed Monday as speculative buying
spilled in from outside markets on renewed risk appetite tied to bullish
economic sentiment.
May cotton settled up 0.78 cent, or 0.9%, at 82.28 cents a pound.
Equities rose on news of an unexpected rise in pending U.S. home sales during
March. On the same note, crude-oil price gains led other commodities following
stronger-than-expected U.S. jobs data released last week. The bullish news for
the U.S. economy sent investors out of the dollar and into riskier bets. The
weak dollar made prices of commodities contracts relatively less expensive in
other currencies. Metals and most agricultural commodities prices rose Monday.
Money flow from outside markets lifted cotton, said Ron Lawson, managing
director at Logic Investment Services in Napa Valley, Calif.
"Old-crop cotton continues to be in demand with new-crop taking all the
selling," Lawson said.
May cotton prices have traded in a range of roughly 80 cents to 83 cents
since the market reached two-year highs on March 1. Projections that world
cotton demand would outpace supply in the current crop year--which relates to
the May and July contracts--lifted prices. However, expectations for a larger
U.S. and world crop in the upcoming August-July season are keeping the December
contract from rising comparatively to nearby futures.
Lawson said commercial cotton traders are watching stock levels for signs of
demand. Stocks are growing at already elevated levels, and sizeable
decertifications would indicate cash cotton is being sold.
ICE daily cotton stocks increased by 35 500-pound bales Thursday to total
794,857 bales, with 40,423 bales awaiting review and 15 decertification orders,
according to exchange data.
Traders are also looking ahead to the U.S. Department of Agriculture's April
supply-and-demand report scheduled for Friday. Weather in the U.S. is also key
to the planting season, which is just beginning.
Cotton planting is active across south Texas where warmer, drier weather is
present, according to Meteorlogix, a private forecaster.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 3,770 positions Thursday to total 196,611, according
to the exchange.
Volume was estimated at 17,273 lots. In floor-traded options, approximately
5,538 calls and 2,093 puts traded, according to exchange data.
Close Change Range
May 82.28 +78 pts 81.55-82.72
Jly 83.52 +78 pts 82.65-83.87
Dec 75.46 +36 pts 74.90-75.47