Cotton futures settled slightly firmer Tuesday as it ended a five-day losing streak on trade and possible consumer buying, analysts said. The benchmark May contract on ICE Futures US rose 0.04 cent to finish at 88.04 cents per lb, dealing from 87.94 to 88.93 cents. It was an inside day within Monday's 87.01 to 89.16 cents band.
Volume traded Tuesday reached about 17,000 lots, about 30 percent under the 30-day norm, Thomson Reuters data showed. "After five down days, the market is due for some consolidation," said Mike Stevens, an independent analyst in Louisiana. He said the cotton market has been pinned in a range just under 88 to 94 cents, basis spot month, for several weeks.
Traders said consumer buying always seem to emerge when the cotton price falls below 88 cents and any advance seems capped above 94 cents. Most of the buying seems to come from No 1 consumer China, whose cotton imports in February climbed 234 percent to 616,000 tonnes.
The cotton market here is also waiting for news from India, which last week banned cotton exports and then relented by deciding this week to allow some cotton to be shipped, with the industry and the government split over the issue. India is the world's No 2 cotton producer and the biggest exporter after the United States.
The cotton trade is also waiting for the US Agriculture Department's weekly export sales data due out on Thursday at 8:30 am EDT (1230 GMT) to gauge how demand is shaping up during the week of India's back-and-forth decision on exports. Analysts said the market is still weighed by bearish fundamentals which could be seen in the USDA's supply report released last week.
USDA increased the world 2011/12 cotton production forecast to 123.64 million (480-lb) bales from an earlier estimate of 123.34 million, reduced world consumption to 108.72 million bales from 109.71 million, and upped world ending stocks to 62.32 million from 60.77 million bales. USDA has been steadily cutting world cotton output and usage, causing stocks to expand, over the last few months.
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