NEW YORK (Dow Jones)--Cotton prices were lifted by a late burst of
broad-based buying Wednesday on rosier economic outlooks.
Nearby cotton for July delivery settled 1.11 cents, or 1.3%, higher at 82.71
cents a pound on ICE Futures U.S. The most actively traded December contract
settled up 0.24 cent, or 0.3%, at 74.56 cents a pound.
Cotton prices have been trending lower under the weight of expectations for a
bumper crop from fall U.S. harvest. Weak economic outlooks have also pushed
cotton lower as consumers buy fewer textiles--the primary use of cotton--when
household budgets are tight.
But buying from speculators, like banks and hedge funds, lifted equities and
commodities late in the day following a bullish forecast for second-quarter
financials earnings. Money-manager State Street projected second-quarter profit
well above analysts' forecasts, citing improving revenue trends. Equities
jumped as investors saw the forecast as a harbinger of economic improvement to
come. Consumers in stronger economies use more commodities like cotton, crude
and grains, which also rose with equities.
A turn-around in economic sentiment could lift cotton prices, but analysts
said a move lower is more likely in light of the upcoming harvest.
The December contract scraped its lowest levels in 10 months intraday at
73.55 as speculators sold on thoughts that demand would weaken and the large
harvest would pressure prices.
The contract could move toward the 72 to 73 in the next few weeks, said Luis
Rangel, vice president of commodities derivatives at ICAP Futures U.S. in
Jersey City, N.J.
The U.S. cotton crop was rated 65% in good-to-excellent condition in the
week ended July 4, up from 62% the week before, USDA data show. Sixty-four
percent of the crop is squaring, up from the 55% average. Fifteen percent is
setting bolls, up from 8% last week and on par with the average.
ICE daily cotton stocks decreased by 28,286 500-pound bales Tuesday to total
316,517 with 316,517 decertification orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 2,028 positions Tuesday to total 159,524, according
to the exchange.
Volume was estimated 13,991 lots. In options, approximately 4,549 calls and
3,036 puts traded, according to exchange data.
Close Change Range
Jly 82.71 +1.11 81.25-83.67
Oct 77.96 +0.84 76.52-77.96
Dec 73.55 +0.24 73.55-75.01