NEW YORK (Dow Jones)--Cotton prices tumbled to three-week lows with fund
traders selling a broad range of commodities and equities as macroeconomic
concerns plagued markets.
Nearby cotton for May delivery settled 2.13 cents, or 3%, lower at 78.25
cents a pound on ICE Futures U.S. Most-active July cotton settled 2.23 cents,
or 3%, lower at 79.85.
Uncertainty surrounding Greek and European sovereign debt Thursday caused
speculative funds to sell bullish positions in many commodities markets.
Traders sought safe bets like the dollar, which left agricultural commodities
and most metals prices lower as equities dropped late in the session.
Outside pressure added to recent market-specific cues as cotton traders await
more signs of the textile demand that has supported prices for months.
"People are eyeing this cert stock and wanting to know what's going on with
it," said Ron Lawson, managing director at LOGIC Investment Services in Sonoma,
Calif.
ICE certificated cotton stocks for delivery against the futures contract
continue to rise, casting uncertainty on the scenario of increased mill demand
and dwindling supplies that drove futures to two-year highs in recent weeks. A
major merchant took control of those supplies in the March delivery period, and
then handed them off to two other major merchants this month. Unless those
stocks are decertificated for presumed sale on the cash market, the owners
stand to lose the premium between July and December 2010 contracts, Lawson
said.
ICE daily cotton stocks increased by 3,893 500-pound bales Wednesday to total
1.03 million with 44,263 bales awaiting review and 42 decertification orders,
according to exchange data.
ICE July cotton needs to hold below the 80-cent level to compete with cash
values, he said.
Traders are looking ahead to Tuesday's crop production and supply and demand
reports from the U.S. Department of Agriculture. The May report holds the first
outlook for the 2010-11 crop that is being planted in the U.S. since
preliminary estimates issued in February.
Thursday was the last trading day for May 2010 cotton futures.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 4,222 positions Wednesday to total 179,943, according
to the exchange.
Volume was estimated at 20,660 lots. In options, approximately 5,166 calls
and 6,211 puts traded on the floor, according to exchange data.
Close Change Range
May 78.25 -2.13c 78.25-80.41
Jly 79.85 -2.23c 79.80-82.50
Dec 75.51 -1.79c 75.27-77.40