NEW YORK (Dow Jones)--ICE Futures U.S. cotton tagged six-week highs Tuesday
as the falling U.S. dollar boosted commodities prices across the board.
Most-active May cotton settled up 135 points, or 1.3%, at 76.26 cents a
pound. The contract touched the 76.46 high in the second half of the session.
The weaker U.S. dollar lifted commodities prices as bullish market sentiment
sent traders out of the safe-haven greenback and into riskier investments.
Chicago Board of Trade grains, metals, energies and softs prices jumped on
buying from speculative funds, analysts said. These traders have no use for the
underlying commodity, as opposed to commercial traders who hedge physical
cotton in the futures market.
Analysts noted technical buying in cotton as speculative funds reduced their
net long position and added shorts in the last month.
The cotton market also had intrinsic support as futures shaved off nearly
five weeks of losses in a rally last week. Gains were based on outlooks for
stronger world demand and tighter U.S. supplies.
Continued dollar weakness could push May futures to a test of 77.37, the Dec.
28 high, said Boyd Cruel, senior softs analyst at Vision Financial Markets in
Chicago.
That resistance point is just short of the 16-month high hit Jan. 4 at 77.83.
Futures then dropped back as speculators exited amid waning mill demand
attributed to high prices.
Analysts noted U.S. cotton export sales may decrease this week as China's
markets are closed for the Lunar New Year celebration.
Traders continue to roll out of March contracts into May ahead of first
notice for the delivery period Feb. 22.
ICE daily cotton stocks increased by 10,891 500-pound bales Wednesday to
total 487,429 bales with 27,262 bales awaiting review and 2,526 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 591 positions Friday to total 161,749, according to
the exchange.
Volume was estimated at 30,576 lots. In options, approximately 10,039 calls
and 4,747 puts traded, according to exchange data.
Close Change Range
Mar 75.34 + 95 pts 74.27-75.74
May 76.26 +135 pts 74.68-76.46
Dec 73.13 + 11 pts 72.35-73.45