US cotton futures closed flat on Monday as investors awaited a supply/demand report from the US Department of Agriculture, but new-crop contracts rose 3 percent on buying related to spreads. The key May cotton contract on ICE Futures US ended unchanged at $1.9555 per lb, dealing from $1.9221 to $1.9649. Last week, cotton fell 4.4 percent.
The new-crop December contract gained 3.91 cents to end at $1.3609. Independent cotton analyst Mike Stevens of Louisiana described Monday's business as "push and pull" between support from new-crop December and weakness in old-crop contracts such as May and July.
About 60 to 70 percent of the day's volume was related to spread trading between May and December as well as between July and December, Stevens said. Volume traded in the cotton market totalled around 17,000 lots, about one-third under the 30-day norm and sharply below Friday's level, Thomson Reuters preliminary data showed. Volume traded on Friday reached 27,789 lots, ICE Futures US data showed.
The level of investor interest hit a 6-1/2-week high as open interest in cotton futures stood at 192,446 lots as of April 1, according to ICE Futures US figures. The USDA's potential plantings forecast of US 2011 cotton sowings, a much lower-than-expected 12.566 million acres (5.083 million hectares), should do little to quell a two-year rally in cotton futures, analysts said. They said the main concern about US cotton acreage was a dry spell in the top growing area of Texas, which is expected to plant about half of the US cotton crop. Dealers said the market would now turn its attention to the USDA's monthly supply/demand report to check for any changes in cotton consumption for the rest of the 2010/11 season. The report is due on Friday at 8:30 am EDT (1230 GMT).
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