NEW YORK (Dow Jones)--The rallying dollar and weaker Chicago Board of Trade
grains tugged ICE Futures U.S. cotton marginally lower Friday.
March cotton settled down 11 points, or 0.15%, at 69.03 cents a pound.
Cotton futures are in a corrective phase after rallying noticeably through
the last quarter of 2009, but skidding lower after the first of the month.
March futures hit a three-month intraday low Thursday at 68.83.
The dollar hit its strongest point since August as strong GDP and consumer
sentiment surveys gave a bullish boost to the currency against its rivals.
However, a strong greenback makes futures contracts more expensive in other
currencies. CBOT soy, corn and wheat also settled lower. Cotton often trades in
tandem with these competing row crops ahead of spring plantings. Producers use
futures prices to gauge the possible returns from each commodity.
Despite outside weakness, cotton held higher through most of the session.
Traders were reluctant to sell as technical chart measurements indicate cotton
has fallen too far, too fast to maintain its bearish momentum in the near term,
said Sterling Smith, market analyst at Country Hedging.
The majority of cotton volume through the session was spread trading, said
Sharon Johnson, senior cotton analyst at First Capitol Group. Closely followed
commodities indexes will roll their positions from the March contract into May
beginning next week, Johnson said.
Current tight world cotton supplies and steady mill buying gave rise to
cotton's rally. However, prices backed off on selling from speculators, who
have no use for the underlying commodity. Prices had also risen higher than
textile mills were willing to pay.
ICE daily cotton stocks increased by 8,401 500-pound bales Thursday to total
476,500 bales with 49,942 bales awaiting review and 880 decertification orders,
according to exchange data.
ICE cotton open interest, the number of active positions left at the end of
the session, decreased by 220 positions Thursday to total 169,704, according to
the exchange.
Volume was estimated at 23,155 lots. In options, approximately 3,046 calls
and 2,553 puts traded, according to exchange data.
Close Change Range
Mar 69.03 -11 pts 68.92-69.72
May 70.63 - 8 pts 70.49-71.30
Dec 70.84 + 9 pts 70.67-71.23