NEW YORK–ICE Futures U.S. cotton settled off of three-week highs Thursday as speculative buying overpowered outside weakness and trade hedging.
Most-active December cotton settled up 44 points at 60.92 cents a pound and the nearby July contract settled 7 points higher at 56.80. For the week, December gained 4.08 cents.
Cotton gapped higher on the open and quickly ran to 61.29, the contract’s strongest point since June 12, after Wednesday’s close at the high end of the exchange’s 300-point daily trading limit. Futures eased back in early dealings through midday when softer monthly U.S. jobs data showed that speculators may have overstated a speedy economic recovery, which led to a stronger U.S. dollar and drops in commodities prices across the board. December cotton slid to the 59.33 session low, but quickly perked back up to find resistance at highs. Strong weekly export sales data also added support to cotton.
Speculative buying that poured in Wednesday carried on amid market talk that China raised its cotton import quota by nearly 2 million bales, said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta.
Cotton prices show signs of stabilization in the near term amid late monsoon rains in India and firmer demand outlooks from China looks, said Rob Kurzatkowski, futures analyst at optionsXpress in Chicago.
Bullish chart patterns show multiple closes above 62.50 would confirm a new leg higher for December futures, said Sterling Smith, market analyst at Country Hedging in St. Paul, Minn.
However, dropping equities prices could soon take some of the shine off of cotton’s bullish outlook, Johnson said. Additionally, weather forecasts that call for rain in U.S. cotton growing regions also strip away the market’s bullish veneer. Scattered showers and thunderstorms are expected through the weekend into early next week, according to private forecaster DTN Meteorlogix.
ICE Futures U.S. cotton trading is closed Friday in observance of the July 4 holiday. ICE daily cotton stocks increased by 1,739 500-pound bales Wednesday to total 437,582 bales with 20 bales awaiting review, according to exchange data.
ICE cotton open interest increased by 3,140 positions Wednesday to total 111,396, according to the exchange.
[source: futuresource.com]