NEW YORK (Dow Jones)--Cotton prices settled mixed Thursday as traders sold
nearby July futures and bought December on ideas that more risk sits in the
deferred month.
Nearby cotton for July delivery ended down 0.56 cent, or 0.7%, at 81.28 cents
a pound on ICE Futures U.S. The December contract ended up 0.15, or 0.2%, at
79.08
July cotton prices are trading nearly 40% higher than year-ago levels. Cotton
production is expected to fall 13% short of demand in the year ending July 31.
The U.S. is the top cotton exporter in the world, and had become the de facto
source of raw fiber as supplies dwindle and the marketing season winds down.
The No. 2 exporter, India, has a limited export ban in place. Both countries
are the top suppliers to China, the world's top cotton producer, importer and
textile manufacturer.
"The fundamentals for the cotton market remain positive, in our view, on the
back of a global economic recovery and higher imports and demand from China
owing to a pick-up in its textile industry," Barclays Capital said in a market
letter Thursday. "Domestic cotton prices in China remain elevated, signifying
tight domestic conditions, which bode well for Chinese import demand going
forward."
But traders are rolling out of July cotton, which will go into delivery in
late June, and buying the December contract. December is atypically less
expensive than July because a bumper supply is expected after farmers planted
the recently higher-priced crop.
In the southeast and Mississippi River Delta, growing conditions for
fall-harvested crop, represented by December futures, are generally favorable,
though it has become too dry across Louisiana and southern Mississippi,
according to private forecaster Meteorlogix. Warmer weather and adequate soil
moisture benefit crop emergence and development across West Texas, Meteorlogix
said. West Texas is the top cotton producing region in the U.S.
Without fresh news to drive the market, July futures are likely to hold
between support at 80 cents and resistance at 84 cents and 85 cents, said Boyd
Cruel, senior softs analyst at Vision Financial Markets in Chicago.
ICE daily cotton stocks decreased by 2,024 500-pound bales Wednesday to total
1.073 million with 47,633 bales awaiting review and 2,218 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 3,545 positions Wednesday to total 193,518, according
to the exchange.
Volume was estimated 19,900 lots. In options, approximately 4,221 calls and
2,290 puts traded, according to exchange data.
Close Change Range
Jly 81.28 -0.56 81.20-82.36
Oct 78.57 +0.42 77.96-78.57
Dec 79.08 +0.15 78.41-79.20
NEW YORK (Dow Jones)--Cotton prices settled mixed Thursday as traders sold
nearby July futures and bought December on ideas that more risk sits in the
deferred month.
Nearby cotton for July delivery ended down 0.56 cent, or 0.7%, at 81.28 cents
a pound on ICE Futures U.S. The December contract ended up 0.15, or 0.2%, at
79.08
July cotton prices are trading nearly 40% higher than year-ago levels. Cotton
production is expected to fall 13% short of demand in the year ending July 31.
The U.S. is the top cotton exporter in the world, and had become the de facto
source of raw fiber as supplies dwindle and the marketing season winds down.
The No. 2 exporter, India, has a limited export ban in place. Both countries
are the top suppliers to China, the world's top cotton producer, importer and
textile manufacturer.
"The fundamentals for the cotton market remain positive, in our view, on the
back of a global economic recovery and higher imports and demand from China
owing to a pick-up in its textile industry," Barclays Capital said in a market
letter Thursday. "Domestic cotton prices in China remain elevated, signifying
tight domestic conditions, which bode well for Chinese import demand going
forward."
But traders are rolling out of July cotton, which will go into delivery in
late June, and buying the December contract. December is atypically less
expensive than July because a bumper supply is expected after farmers planted
the recently higher-priced crop.
In the southeast and Mississippi River Delta, growing conditions for
fall-harvested crop, represented by December futures, are generally favorable,
though it has become too dry across Louisiana and southern Mississippi,
according to private forecaster Meteorlogix. Warmer weather and adequate soil
moisture benefit crop emergence and development across West Texas, Meteorlogix
said. West Texas is the top cotton producing region in the U.S.
Without fresh news to drive the market, July futures are likely to hold
between support at 80 cents and resistance at 84 cents and 85 cents, said Boyd
Cruel, senior softs analyst at Vision Financial Markets in Chicago.
ICE daily cotton stocks decreased by 2,024 500-pound bales Wednesday to total
1.073 million with 47,633 bales awaiting review and 2,218 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 3,545 positions Wednesday to total 193,518, according
to the exchange.
Volume was estimated 19,900 lots. In options, approximately 4,221 calls and
2,290 puts traded, according to exchange data.
Close Change Range
Jly 81.28 -0.56 81.20-82.36
Oct 78.57 +0.42 77.96-78.57
Dec 79.08 +0.15 78.41-79.20
