Benchmark cotton futures finished with a small decline Wednesday when prices
fell back as crude also sagged and the dollar rose, encouraging some
speculators to sell in order to exit positions.

However, much of the focus was on spread trading, with deferred cotton
futures closing higher as speculators began to roll out of positions in the
most-active July contract and into the December earlier than normal.

Cotton for July delivery fell 0.16 cent, or 0.20%, to settle at 80.37 cents
per pound on ICE Futures U.S. However, December, the month with the next most
open positions behind July, climbed 0.99 cent, or 1.30%, to 77.29 cents.

Cotton rose early in the day, and analysts at the time linked this to the
stronger tone in the stock market and gains in a wide range of the commodities.
Rising stocks tend to increase optimism about the economy and thus demand for
materials such as cotton.

As cotton rose, buy stops were activated, said Sharon Johnson, senior cotton
analyst with First Capitol Group in Atlanta. Stops are pre-placed orders
triggered when certain chart points are hit.

"The stronger dollar and weaker crude then pulled the July [cotton] back
toward unchanged," Johnson said.

Crude is a bellwether commodity, with speculators often moving in and out of
other commodities at the same time as oil. Meanwhile, a stronger dollar tends
to hurt commodities generally by making them more expensive in other
currencies.

Meanwhile, as July cotton fell back, speculators decided to "run for cover"
and exit positions in which they previously bought, Johnson said. Many who
closed out their positions in the July then opted to start buying the December
contract instead, even though first-notice day for the July is not until late
June.

Normally, this rollover might not happen in earnest until late May or early
June, Johnson said. However, technical support, favoring the July contract over
the December, failed around 4.25 cents, Johnson said. This encouraged the move
out of the July futures.

"With nothing else going on, that [spread activity] dominated the trade
today," Johnson said. She later added: "The outside markets had an influence on
the July. And December is just benefiting from the exodus out of the July."

ICE cotton open interest--the number of active positions left at the end of
the session--increased by 517 positions Tuesday to total 177,015, according to
exchange data.

Electronic volume as of 2:30 p.m. EDT (1830 GMT) Wednesday was estimated at
17,125 lots. In floor options trading, there were approximately 5,483 calls and
2,922 puts, according to exchange data.

Close Change Range
July 80.37c dn 0.16c 80.29c-82.49c
December 77.29c up 0.99c 76.30c-77.45c