NEW YORK (Dow Jones)--Cotton prices bounced higher Monday as early sales from
risk-averse fund traders uncovered buying from cotton merchants and end users
near 15-week lows.
Nearby cotton for July delivery settled 0.16 cents, or 0.2%, higher at 77.22
cents a pound on ICE Futures U.S. Most-active December cotton settled 0.23
cent, or 0.3%, higher at 75.51 cents a pound. The contract touched 74.09
midday, its lowest level since Feb. 16.
Cotton prices declined in the previous nine sessions. Speculative traders
like hedge funds and banks exited many commodities positions as uncertainty
regarding Europe's economic viability came to a head. Many of those traders
bought the dollar, which made commodities like cotton more expensive in other
currencies. Those losses also triggered pre-set technical sell signals that
pressured prices as well.
"The market's been in a bit of a technical breakdown in the last couple of
weeks," said Luis Rangel, vice president of commodities derivatives at ICAP
North America in Jersey City, N.J.
Rangel noted that uncertainty about European growth and weaker-than-expected
U.S. jobs data Friday strike a bearish chord with cotton, which has been in an
overall bull trend for nearly one year. Rebounding cotton consumption in
response to recovering world growth pushed prices to two-year highs in late
April. Prices have since eased somewhat as a sizeable crop is expected from the
U.S. in the fall.
December futures have support at 74 cents, near Tuesday's low, said Peter
Egli, director of risk management at Plexus Cotton Ltd. in Chicago.
ICE daily cotton stocks decreased by 27,326 500-pound bales Friday to total
1.008 million with 18,409 bales awaiting review and 28,972 decertification
orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 2,724 positions Friday to total 176,365, according to
the exchange.
Volume was estimated 36,354 lots. In options, approximately 3,473 calls and
2,654 puts traded on the floor, according to exchange data.
Close Change Range
Jly 77.22 +0.16 75.80-77.49
Oct 74.82 +0.13 73.60-75.00
Dec 75.51 +0.23 74.09-75.63
