NEW YORK (Dow Jones)--Cotton prices rose modestly Monday with support from
bullish demand prospects linked to China's currency policy shift.
Nearby cotton for July delivery settled 0.37 cent, or 0.5%, higher at 82.15
cents a pound on ICE Futures U.S. Most-active December cotton settled 0.22
cent, or 0.3%, higher at 79.17 cents a pound.
Cotton prices are holding relatively high levels as global production is
projected to fall 14.5% short of demand in the current season. Demand in a
world textile rebound, driven by economic growth, is also anticipated to leave
a 4.5% supply shortfall, according to the U.S. Department of Agriculture.
U.S. equities rose early on forecasts for global growth that accompanied
China's currency decision. China is the world's top cotton producer, importer
and textile manufacturer. The yuan is likely to firm against the dollar in the
longer term, making U.S. commodities less expensive to China's importers.
Enthusiasm waned as traders came to realize China was anticipating a gradual
currency appreciation to reflect its strong economy.
But nearby demand will keep cotton prices supported in the near term,
analysts said.
Demand ideas held strong with support from withdrawals from ICE cotton
stocks, said John Flanagan, president of Flanagan Trading in Fuquay-Varina,
N.C.
ICE daily cotton stocks decreased by 172,857 500-pound bales Friday to total
568,792 with 174,541 decertification orders, according to exchange data.
Withdrawals are presumably for sales overseas.
December cotton prices could test 80 cents by the end of the week, said
Sterling Smith, market analyst at Country Hedging in St. Paul, Minn.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 4,003 positions Friday to total 166,624, according to
the exchange.
Volume was estimated at 14,840 lots. In options, approximately 561 calls and
478 puts traded on the floor, according to exchange data.
Close Change Range
July 82.15 +0.37 81.80-83.00
Oct 78.91 +0.35 78.06-79.47
Dec 79.17 +0.22 78.37-79.57
