NEW YORK (Dow Jones)--Cotton prices ended little changed Tuesday as
late-session selling kicked prices back from highs amid ample growing stocks
and bearish technical signals.
May cotton settled up 0.01 cent or 0.01% at 82.29 cents a pound, and the July
contract settled 0.16 cents or 0.19% lower at 83.36.
Mike Stevens, an independent cotton broker and analyst based in Mandeville,
La., said an influx of fresh speculative capital into the market has boosted
cotton recently. The market is inching back toward two-year highs hit on March
1 when the May contract touched 84.60.
Buying on expectations that world cotton demand would outpace production--by
13%, according to the most recent USDA data--lifted futures to that level.
Bullish technical charts attracted more buying, which has kept May in a 79-84
range in the last month.
However, widening spreads between the May and July contracts indicate
supplies are not as tight as previously thought, said Sharon Johnson, senior
cotton analyst at First Capitol Group in Atlanta. Rising certified stocks
highlight sale through the futures market is more lucrative than cash business,
Johnson said.
ICE daily cotton stocks increased by 10,055 500-pound bales Monday to total
804,912 bales with 46,292 bales awaiting review and 144 decertification orders,
according to exchange data.
The July contract charted a bearish technical formation during the session
after backing off of the 84.24 high - just past levels where the contract found
resistance on March 1 and March 23, Johnson said. The "triple-top" formation
could spark more selling in the near term as it indicates prices will not push
far beyond the high.
Analysts said cotton traders paid little attention to news that Brazil has
agreed to delay trade retaliation against the U.S. for its cotton subsidies.
The U.S. has set up a fund to pay Brazil $147 million annually to compensate
for damages U.S. subsidies cause Brazilian cotton producers. The action is in
response to a dispute the World Trade Organization first ruled on in 2005.
ICE cotton open interest-–the number of active positions left at the
end of the session--increased by 1,610 positions Tuesday to total 198,221,
according to the exchange.
Volume was estimated at 20,668 lots. In floor-traded options, approximately
3,823 calls and 1,650 puts traded, according to exchange data.
Close Change Range
May 82.29 + 1 pt 82.00-83.17
Jly 83.36 -16 pts 83.16-84.24
Dec 75.99 +53 pts 75.15-76.00