NEW YORK (Dow Jones)--Cotton prices slid to three-week lows Friday as traders
took profits ahead of the three-day weekend, though support held due to strong
demand.
Nearby cotton for July delivery settled 1.23 cent, or 1.5%, lower at 80.05
cents a pound on ICE Futures U.S.
The cotton market has largely ignored outside volatility in recent weeks.
High prices for cotton in China, the world's top importer and textile producer,
are spilling over to the U.S. as available supplies dwindle ahead of the coming
season's harvest. World cotton demand has rebounded with recovering economic
growth. World cotton consumption is expected to fall short of production by 13%
in the current season, a shortfall that will extend into the season that begins
Aug. 1.
Cotton prices came under pressure Friday as traders sold bullish bets ahead
of the long weekend to avoid risk. Fund traders also tend to book profits at
the end of the month to bolster profits.
"The bullish structure of the market is migrating from July to December,"
said Ron Lawson, managing director at LOGIC Investment Services in Sonoma,
Calif.
Overall, traders are in the process of selling July futures, which represent
the remaining stocks left from the last harvest, and buying December contracts,
which represent the crop that is being planted.
"Since the cash market is likely to hold steady due to the tight supply
situation, the futures market too should remain well supported near 80 cents,"
said Peter Egli, director of risk management at Plexus Cotton Ltd. in Phoenix.
"Since it seems more and more likely that cash prices will be well maintained
during early part of next season, December seems to be in the process of
catching up to the price level of current crop."
ICE daily cotton stocks decreased by 840 500-pound bales Thursday to total
1.072 million with 36,372 bales awaiting review and 2,640 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 750 positions Thursday to total 192,768, according to
the exchange.
Volume was estimated 29,317 lots. In options, approximately 3,536 calls and
2,392 puts traded on the floor, according to exchange data.
Close Change Range
Jly 80.05 -1.23 80.00-81.46
Oct 78.06 -0.51 77.90-78.50
Dec 78.61 -0.47 78.14-79.00