NEW YORK (Dow Jones)--Cotton prices moved lower Wednesday as the strong
dollar and weaker commodities pressured the market.
May cotton on ICE Futures U.S. settled down 1.31 cents, or 1.6%, at 80.98
cents a pound.
"Dollar strength is causing this weakness," said Boyd Cruel, senior softs
analyst at Vision Financial Markets in Chicago.
The greenback rose Wednesday as uncertainty surrounding Greece's debt package
triggered safe-haven buying. The CRB Index was lower, as were crude, cocoa,
coffee and copper. Traders sell commodities when the strong dollar makes them
more costly in other currencies.
May cotton prices added to recent losses Wednesday following a reversal from
Tuesday's two-month high at 83.17. The contract has held in a range of roughly
79 to 84 cents since the market touched two-year highs March 1. May futures
reached 84.60 that day. The market rose on expectations that world cotton
demand would outpace supply in the marketing year ending July 31. The U.S.
Department of Agriculture projects textile mills will require 13% more raw
cotton in that time frame than was produced.
Spillover sales triggered preset technical sell stop Wednesday, which added
to pressure, Cruel said. He pegged nearby technical support for May cotton at
80.40-80.45.
Traders are looking to weekly USDA export sales data for demand cues. The
data is scheduled for release at 8:30 a.m. EDT Thursday.
However, some analysts note supply ideas may be relaxing, a bearish cue for
prices. High prices can discourage buying from textile mills as they await
lower levels. Spreads between May and July futures have eased, an indicator of
weaker demand.
"The swelling of cert stocks past 800,000 bales tells us that there is plenty
of extra cotton to meet pipeline needs through summer," according to a market
letter from Varner Brothers, a brokerage in Cleveland, Miss.
ICE daily cotton stocks increased by 8,737 500-pound bales Tuesday to total
813,649 bales with 55,619 bales awaiting review and 328 decertification orders,
according to exchange data.
ICE cotton open interest, which is the number of active positions left at the
end of the session, increased by 3,360 positions Tuesday to total 201,581,
according to the exchange.
Volume was an estimated 21,782 lots. In options, approximately 4,513 calls
and 4,513 puts traded on the floor, according to exchange data.
Close Change Range
May 80.98 -131 pts 80.56-82.35
Jly 82.19 -117 pts 81.60-83.23
Dec 75.69 - 30 pts 75.26-75.90