NEW YORK, April 5 (Reuters) - Cotton futures ended the
shortened week lower on Thursday, extending the prior session's
losses as investors continued to unwind long positions after
Federal Reserve minutes showed policymakers had little appetite
for more economic stimulus.
U.S. commodity and financial markets will be closed on
Friday for the Good Friday holiday, and will reopen on Monday.
Late on Tuesday, the Fed released minutes from its March
policy setters' meeting, which showed they were less keen on
adding monetary stimulus as the U.S. economy improves.
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With decreased chances of continued easy money over the next
two years, some investors exited so-called risky assets.
"We are still suffering from the risk-off trade after the
Fed said there is little likelihood of a QE3 (third round of
easing)," said Ron Lawson, managing director of
logicadvisors.com in California.
The benchmark May contract on ICE Futures U.S. closed
down 0.78 cent, or 0.87 percent, at 88.54 cents per lb, having
traded from 88.20 to 90.44 cents.
The May contract's volume was 13,413 lots, compared with
20,121 lots in Wednesday's heavy selling.
New-crop December slipped 0.82 percent, or 0.72 cent.
It finished at 87.54 cents, near the day's 87.46 low, unseen
since Dec. 29. Volume came to 3,609 lots.
Cotton prices erased some losses early in the session as
mills took advantage of the previous day's dips and bought to
restock their supplies.
"Mills have very little, if any, forward coverage. So, when
you get these dips, it's an opportunity for them to get some
forward coverage," Lawson said.
But some funds continued to exit long positions put on last
week, opting instead to add to short cotton positions.
Sharon Johnson, senior cotton analyst at Penson Futures in
Atlanta, pointed out that this week's spec/hedge report showed
speculators covered 7,000 short positions last week and nearly
doubled their net long positions.
She said they likely reversed themselves and took out more
short positions on Wednesday. That selling continued on
Thursday, brokers said.
Also, a daily report from Flanagan Trading Corp said prices
had fallen on ideas that China's cotton-buying binge was ending.
"Analysts estimate that China has bought 19 million bales
for their strategic cotton reserve, and if true it would mean
they could last a full year without the need to import another
bale of cotton," the report said.
The U.S. Department of Agriculture reported early on
Thursday that weekly export sales of cotton were strong at
148,500 bales, with an additional 96,200 bales of new crop sold
and 27,800 bales of optional-origin cotton sold.
Shipments reached a marketing-year high of 422,400 bales.
The next USDA acreage report is due on June 30, and will set
the stage for the upcoming 2012/13 marketing year (August/July).
Open interest in the cotton market, an indicator of investor
exposure, jumped by 1,237 lots to 192,681 lots as of April 4,
exchange data showed.