NEW YORK (Dow Jones)--Cotton prices fell to three-week lows Wednesday under
the weight of speculative fund profit taking on the heels of growing outlooks
for U.S. production.
Nearby cotton for July delivery settled 1.08 cent, or 1.3%, lower at 82.60
cents a pound on ICE Futures U.S. The most actively traded December contract
settled 1.75 cent, or 2.2%, lower at 76.38 cents a pound.
Despite Wednesday's losses, cotton prices are up 55% on the year as world
cotton demand has rebounded amid the economic recovery. Global cotton
production is expected to fall 13% short of use in the season ended July 31,
and still 4.5% behind demand in the coming season. However, estimates for the
U.S. cotton crop to be harvested in the fall are growing, which is dulling
cotton's bullish edge.
The market added to the previous session's losses Wednesday as speculative
traders, like banks and hedge funds, sold futures to book profits at the end of
June, as well as the end of the second quarter of the year. These money
managers usually report the progress of investments at those points on the
calendar.
A bearish outlook triggered most of cotton's losses following an updated
outlook of planted acres, which are the basis of production estimates.
On Wednesday, the U.S. Department of Agriculture estimated 2010 U.S. cotton
planted acres up 19% from the year before at 10.90 million acres. Domestic
production is expected to be ample as well, with 62% of the crop rated as
good-to-excellent in the week ended June 27.
Commercial traders, such as mills merchants, bought futures at lows, a
cotton broker and analyst said.
Prices could move toward 73 to 75 cents, said Luis Rangel, vice president for
commodities derivatives at ICAP Futures in Jersey City, N.J.
ICE daily cotton stocks decreased by 30,288 500-pound bales Tuesday to total
396,054 27,802 decertification orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 319 positions Tuesday to total 163,979, according to
the exchange.
Volume was estimated 19,912 lots. In options, approximately 1,129 calls and
1,916 puts traded on the floor, according to exchange data.
Close Change Range
Jly 82.60 -1.08 81.80-84.26
Oct 78.81 -0.49 78.10-79.25
Dec 76.38 -1.75 75.86-78.29