NEW YORK (Dow Jones)--ICE Futures U.S. cotton carved out a seven-week low
Friday as the market corrected after its late 2009 rally and searched for
demand.
March cotton settled down 45 points at 72.44 cents a pound, a loss of less
than 1% for the session, but down over 4% from last week. The May contract
settled 46 points lower at 73.61.
Cotton futures topped off an extended rally Monday as enthusiastic New-Year
fund buying pushed March futures to 16-month highs. Projections for tighter
world supplies and growing consumption supported cotton prices, but also pushed
futures prices away from the levels where textile mills buy. Analysts said
futures prices are likely to set back and consolidate recent gains in the near
term.
"The market is quite bullish, but we've gotten ahead of ourselves," said
Sterling Smith, market analyst at Country Hedging in St. Paul, Minn.
Speculative traders, who have no use for the underlying commodity, may sell
bullish positions and move March prices back to chart support at 70-72 cents,
Smith said.
The market has bullish undertones, but is likely to hold in the 70-75 cent
range in the near term, said Peter Egli, director of risk management at Plexus
Cotton Ltd. in Phoenix.
Traders are looking ahead to the January U.S. Department of Agriculture
reports on crop production and on supply and demand, scheduled for Tuesday
morning. Analysts surveyed by Dow Jones Newswires anticipated the USDA would
lower its projection for the 2009-10 domestic cotton crop and slightly raise
export estimates on average.
ICE daily cotton stocks increased by 1,932 500-pound bales Thursday to total
420,995 bales with 23,800 bales awaiting review and 1,320 decertification
orders, according to exchange data.
ICE cotton open interest, which is the number of active positions left at the
end of the session, decreased by 2,282 positions Thursday to total 183,474,
according to the exchange.
Volume was 13,246 lots. In options, approximately 3,102 calls and 6,060 puts
traded, according to exchange data.
Close Change Range
Mar 72.44 -45 pts 72.43-73.40
May 73.61 -46 pts 73.60-74.45
Dec 74.14 -38 pts 74.05-74.80