ICE cotton closes little changed, consolidating after recent rally
Cotton futures were little changed on Wednesday, consolidating after hitting a near five month high during the previous session amid renewed speculator investment and forecasts of tight supplies in the United States, the world's top exporter. The benchmark December cotton contract on ICE Futures US edged down 0.17 cent, or 0.2 percent, to settle at 91.55 cents, hovering near an almost five-month high of 92.54 cents touched on Tuesday. Prices were mixed throughout the session, with speculator-driven buying seen slowing, dealers said.
Copyright Reuters, 2013
A technical break-out and a US government report that stoked concerns over tight US supplies have left the December contract above the 100-day moving average for the past week and up nearly 7 percent over the last six sessions. Open interest totalled 203,810 lots on Tuesday, up by 28,775 contracts in those six sessions, the most recent ICE data showed.
Trading volumes fell on Wednesday from the previous day, although they remained above average, preliminary Thomson Reuters data showed. "The market is digesting a lot of the news it's had - the weather, the supplies," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors. The US Department of Agriculture (USDA) on Monday lowered its forecasts for global output in the 2013/14 crop year that began on August 1.
That included a reduced projection for US production and lower-than-expected US carryover stocks into the new year. Expected rains moving into the Southeast of the United States have further fuelled the rally, as the prolonged wet weather threatens yields in the key growing region.