* Speculators scramble to exit spot July
* Market trading at highest level since mid-May
NEW YORK, June 19 (Reuters) - Cotton futures ended Tuesday
at a month high on speculative buying as investors sought to
unwind positions in the spot July contract before it goes to
delivery next week, brokers said.
The spot July cotton contract on the ICE Futures U.S.
exchange rose the 5.00 cent daily limit to settle at 87.98 cents
per lb. It was the highest close for the spot contract since the
middle of May, Thomson Reuters data showed.
Key December went up 2.57 cents, or by 3.58 percent
to finish at 74.43 cents per lb, dealing from 72 to 74.80 cents.
Volume traded on Tuesday stood near 34,300 lots, over 40
percent above the 30-day norm, Thomson Reuters data showed.
"We have this short play in July," said Sharon Johnson,
senior cotton analyst at commodity house Knight Futures in
Atlanta, Georgia.
"It certainly looks like its going to continue for another
day or two," she said.
Investors are getting out of their short positions because
it would be very difficult for them to get their hands on cotton
they can deliver against the board because U.S. fiber has been
harvested and sold this late in the 2011/12 marketing season
(August/July).
Under exchange rules, only U.S. cotton is deliverable at the
exchange.
Traders said strength is also derived from anticipation that
central bank authorities would take measures to shore up the
global economy. This in turn has weakened the dollar, thereby
boosting dollar-priced commodities such as cotton.
Johnson said there are also weather problems brewing in many
cotton growing countries like China which could impact the
harvest there later in the year.
"Weather has proven to be problematic (everywhere)," she
said.
Monday's estimated volume was at 31,018 lots, the lowest
level since May 21, ICE Futures U.S. data showed.
Open interest in the cotton market, an indicator of investor
exposure, fell for the third session running and amounted to
189,592 lots as of June 18, also the lowest since May 21, the
exchange data said.